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IN EMERGENCY AID
www.cityam.com Issue 1,276 Thursday 2 December 2010 FREE
BUSINESS WITH PERSONALITY
EUROPEAN banks were some of the
biggest beneficiaries of the Federal
Reserve’s $3.3 trillion emergency loan
programmes during the darkest days
of the financial crisis when the US cen-
tral bank desperately tried to keep the
global system functioning.
The biggest release of data on crisis
lending ever revealed by a central bank
shows the breadth of the Fed’s support
as lender of last resort with 21,000
transactions to financial firms, other
central banks and companies between
the beginning of December 2007 to the
end of July this year unveiled.
Among the transactions, which
cover all but one of the Fed’s emer-
gency lending programmes including
direct liquidity injections and invest-
ments in key credit markets, Barclays
Capital emerged as one of the biggest
cumulative borrowers from the
Primary Dealer Credit Facility (PDCF)
providing access to overnight loans.
The firm took 50 overnight loans of as
much as $7.5bn. After it took over
Lehman on 17 September 2008, it bor-
rowed $47.9bn –the highest individual
loan in the life of the PDCF. Barclays
yesterday said that all the loans were
repaid last year. Meanwhile, RBS had
to borrow £36.6bn from the Term
Auction Facility (TAF) Programme pro-
viding access to short-term one and
three-month funding emphasising the
squeeze in dollar liquidity after the col-
lapse of Lehman.
European banks also featured as five
of the ten top users of the Fed’s
Commercial Paper Funding Facility
(CPFF), which bought high-quality
three-month commercial paper from
companies that had difficulty selling it
with Swiss banking giant UBS tapping
it for $37bn in October 2008. Belgium’s
Dexia turned to the CPFF for $10.9bn in
2008 and Germany’s Commerzbank
for $11.6bn.
Senator Bernie Saunders, who
pushed through the amendment to
the Dodd-Frank law forcing the disclo-
sure, said yesterday the “huge sum”
that went out to foreign private banks
and corporations was the “most sur-
prising” element of the published data
and demanded “an extensive look.”
The data also revealed how Wall
Street titans Goldman Sachs and
Morgan Stanley were forced to turn to
the Fed for aid – Goldman borrowed
directly from the Fed 84 times when its
overnight loans peaked at $18bn, while
Morgan Stanley tapped it 212 times
borrowing nearly $60bn.
Companies such as GE also used the
CPFF programme tapping the Fed for
more than $12bn in total. And the
Fed’s reach also extended to foreign
central banks – with the European
Central Bank using the Fed’s dollar
liquidity swap 271 times in total.
Ben Bernanke: Banks and firms
used our temporary liquidity facili-
ties 21,000 times during the crisis
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BY KATIE HOPE
FINANCIAL SERVICES

News
2 CITYA.M. 2 DECEMBER 2010
Optimism for
US recovery
STEADY growth is being observed in
the US, the central bank reported last
night.
In its latest beige book, the Federal
Reserve said the economy “continued
to improve, on balance” from
early/mid-October to mid-November.
Manufacturing activity continued
to grow in “almost all” districts,
reflecting optimistic results from yes-
terday’s ISM manufacturing index.
The beige book found positive
signs for employment. “Hiring activi-
ty showed some improvement across
most Districts,” it said.
And expectations for the holiday
season are high, “with several dis-
tricts expecting higher sales when
compared to year-ago levels.”
Yet there was also bad news for
consumer spending. “Households
remain price sensitive and focused on
buying necessities,” the Fed revealed.
And gloom still lurks over the US
housing market, which “remains
depressed,” with signs in some areas
of “further weakening during the
past six weeks.”
Overall, however, the report was
cautiously optimistic. “Anecdotal
reports of the districts suggest that
activity, on balance, has accelerated
modestly,” said Michael Gapen of
Barclays Capital Research.
MANUFACTURING BOUNCES BACK: P14
BY JULIAN HARRIS
US ECONOMY

UK recovery confounds City experts
FAR from slowing down, Britain’s
recovery is intensifying. Yesterday’s
economic data was remarkably good,
with the purchasing managers’ index
(PMI) suggesting that manufacturing
is now growing at its fastest rate since
1994. Manufacturing accounts for
under nine per cent of UK employ-
ment but remains vital to exports,
despite the growth in recent years of
financial and business services.
The survey once again shocked
many “experts” – the consensus was
for a drop in the PMI survey yet the
actual figure shot up from 54.9 to 58.
The details suggest manufacturing
output is surging at a quarterly rate of
1.2 per cent, the best performance in
ages. Economists have been guilty of
excessive pessimism since the recov-
ery began – just as they were guilty of
excessive optimism in the dying days
of the bubble.
Even Mervyn King misjudged the
rate at which the economy would
recover in 2010. The US embassy cable
dated 17 February released by
WikiLeaks and which created a fuss
yesterday as a result of King’s criticism
of David Cameron and George
Osborne’s inexperience also con-
tained an intriguing passage on the
jobs situation. The private sector has
created well over 300,000 extra jobs
this year, the majority of which were
part-time but a large number full-
time, yet this was what the US was
briefed: “Businesses will cut jobs faster
this year and eliminate many part-
time positions, as employers realise
that the economic recovery will be a
long, drawn-out process, said King.”
The truth, of course, was much more
upbeat; King was also wrong. The
“anemic” nature of global growth, has
in fact been extremely strong thanks
to emerging markets.
What about next year? The Office
for Budget Responsibility’s growth
forecast of 2.1 per cent is eminently
plausible. But it is worth highlighting
that its official forecast that growth
will average 2.4 per cent per year dur-
ing 2010-14 is much lower than the 3.4
per cent achieved over 1994-98, accord-
ing to figures from Henderson,
despite fiscal retrenchment on a simi-
lar scale. In theory at least, the UK
could grow much faster than anybody
is expecting. That concerns about
credit supply are starting to wane is
another plus – many wrongly predict-
ed that weak credit would drag down
the previous recovery in the 1990s, fol-
lowing a hit to banks’ capital.
Company finances are in better
shape. Households have been insulat-
ed by low interest rates, resulting in
fewer arrears and repossessions. The
opportunities for exporters and inter-
national firms are greater than ever.
The trouble is that the private sec-
tor is in other ways in a weaker posi-
tion than it was in the early 1990s,
largely because there is now much
more regulation and higher taxes.
London is less competitive; institu-
tions are relocating elsewhere.
Manufacturing is bouncing back but
only for cyclical reasons; competition
is continuing to intensify as emerging
economies become better at produc-
ing valued-added goods and services.
The real domestic risk, however, is
that interest servicing costs will surge
much faster than anybody expects.
Each percentage point rise in interest
rates and inflation will raise debt
interest spending in 2015-16 by
£10.7bn, or 0.6 per cent of GDP. Who
could cope with mortgages at seven or
eight per cent in three years’ time?
Strong growth means higher interest
rates – and a return to reality guaran-
tees trouble ahead.
allister.heath@cityam.com
US stocks leapt yesterday on news
that America could be ready to sup-
port the extension of the European
Financial Stability fund by providing
extra money to the International
Monetary Fund (IMF)
The Dow Jones Industrial Average
surged 249 points, or 2.27 per cent, to
close at 11,255, while the Standard &
Poor’s 500-stock index gained 25
points to 1,206, and the Nasdaq
Composite added 55 points, or 2.05
per cent, to 2,549. A US official con-
firmed there had been talks with the
European Commission about possibly
enlarging the €750bn (£630bn) EU
IMF stability fund adding that
although it was a decision for Europe
the US would support using the IMF
in such circumstances. The remarks
came before a visit to Europe this
week by a US Treasury envoy who is
expected to visit Berlin, Madrid and
Paris to hold talks about the debt cri-
sis. The IMF has committed €250bn
to the fund already.
EUROZONE:P4-P5, MARKETS: P21
BY MATTHEW WEST
EU ECONOMY

11,200
10,800
10,400
11,600
10Nov 21 Oct 1 Oct 1 Dec 13Sep
ANALYSIS l Dow
11,255.78
01 Dec
US could add to EU fund
EDITOR’S LETTER
ALLISTER HEATH
7
th
Floor, Centurion House,
24 Monument Street, London, EC3R 8AJ
Tel: 020 7015 1200 Fax: 020 7283 5334
Email: news@cityam.com www.cityam.com
Editorial
Editor Allister Heath
Deputy Editor David Hellier
News Editor David Crow
Night Editor Katie Hope
Business Features Editor Marc Sidwell
Lifestyle Editor Zoe Strimpel
Art Director Craig Gaymer
Pictures Alex Ridley
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Sales Director Jeremy Slattery
Commercial Director Harry Owen
Head of Distribution Nick Owen
Editorial Statement
This newspaper adheres to the system of
self-regulation overseen by the Press Complaints
Commission. The PCC takes complaints about the
editorial content of publications under the Editor’s
Code of Practice, a copy of which can be found at
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Ben Bernanke’s Federal
Reserve offered some
hope for the US
recovery in its beige
book for November.
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We knowthat many of our growing
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as good capitalists here at City A.M. we
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AUSTRALIA’S GROWTH RATE STALLS
IN THIRD QUARTER
Australia’s economic growth rate
slowed markedly in the third quarter
to its weakest level in two years as
higher interest rates cut into housing
investment and the rise in the
Australian dollar hit exports. The 0.2
per cent rise in gross domestic prod-
uct compared with the quarter ended
June was less than half market fore-
casts. It helped drag the yearly eco-
nomic growth rate down from 3.3 to
2.7 per cent.
JAPAN’S ORIX JOINS PUSH TO TAP
VIETNAM
Orix, the Japanese financial services
group, has taken a 25 per cent stake
in Indochina Capital, one of
Vietnam’s biggest foreign-run invest-
ment firms, the latest in a spate of
investments in Vietnam by Japanese
companies looking for growth.
FRANKLIN TEMPLETON STARTS
ROMANIA LEGAL ACTION
Franklin Templeton, the fund manag-
er, is taking legal action against the
Romanian government after Romgaz,
the state-controlled natural gas pro-
ducer, made a 400m lei ($122m) dona-
tion to help reduce the country’s
budget deficit. Templeton says the
move could damage investor confi-
dence and harm Romania’s ability to
attract foreign investment and priva-
tise state assets.
GENDER PAY AUDIT PLANS SCRAPPED
The government is to ditch plans to
force companies to disclose how
much they pay women and men in a
move likely to be applauded by big
business but spark consternation
among equality campaigners.Theresa
May, home secretary, will announce
today that she will ask companies to
narrow the pay gap through volun-
tary efforts rather than by enacting
legislation.
FORTNUMS WILL FOLLOW THE MONEY
TO THE MIDDLE EAST
Fortnum & Mason plans to open a
store overseas for the first time in 80
years after returning to profit follow-
ing six years of losses. The Piccadilly
supermarket for the super-rich, made
a £100,000 profit in the year to June,
its first since 2004, according to
results filed this week. This compares
with a £5.7m loss last year, when it
shed 10 per cent of its staff as the
recession cut into sales.
BANKS TOLD TO CLEAN UP THEIR ACT
OVER PPI COMPLAINTS
Financial regulators have stoked a
row with banks over payment protec-
tion insurance amid concerns over
processing complaints. The Financial
Services Consumer Panel said banks
were failing to process thousands of
complaints from customers who
claim they were mis-sold the policies.
OBAMA COMMISSION SAYS US DEBT IS
GREATEST THREAT TO SECURITY
America's growing budget deficit is
the greatest threat to the country's
prosperity and security, President
Obama's Debt Commission warned, as
it recommended sweeping cuts in gov-
ernment spending and an overhaul of
the tax system. The National
Commission on Fiscal Responsibility
and Reform laid out a plan to cut the
US budget deficit to 2.3 per cent of
GDP by 2015 from 9 per cent this year.
THOMAS COOK BLASTS GATWICK
AIRPORT OWNERS
Thomas Cook's chief executive has
told the owners of Gatwick Airport to
“get their act together” after they
closed the site because of the snow.
"It's embarrassing," Manny Fontenla-
Novoa said. “It's winter, we've got
snow. Airports should be investing in
their property and people.”
GLAXO ENDS STUDY OF RED-WINE
DRUG
GlaxoSmithKline formally terminat-
ed a clinical trial of an experimental
drug designed to harness the poten-
tial health benefits of red wine, say-
ing it had minimal efficacy in cancer
patients and could potentially exacer-
bate kidney complications. The drug
maker reiterated it isn't planning any
further testing of the drug.
MYSTERY BUYER HOLDS BULK OF
COPPER
A mystery buyer is apparently hold-
ing more than half of the copper
stocks at the London Metal
Exchange's warehouses, the latest rev-
elation of how a single trader can roil
an entire commodities market. That
trader, whom the exchange hasn't
identified, owns between 50 per cent
and 80 per cent of the 355,750 metric
tons held in LME-listed warehouses
WHAT THE OTHER PAPERS SAY THIS MORNING
BARCLAYS Capital has confirmed
plans to shed hundreds of jobs in its
UK office even as the firm continues
to hire in growth hotspots in Asia.
Both front and back office jobs are
set to go as the firm cuts down on
costs in line with a fall in revenues
this year.
BarCap – the investment banking
division run by incoming Barclays
chief executive Bob Diamond – said
yesterday that it had begun a 90-day
consultation period that will allow it
to reduce its headcount, a process
only required if a company plans to
cut more than 100 workers.
The firm has had a difficult year,
with revenues dropping off in a slow
market for investment banks. Its
income was down 14 per cent in the
third quarter to £2.8bn, having
already fallen 15 per cent during the
previous quarter.
However, the UK office is the only
one currently slated for job cuts
globally. The firm had already cut
300 jobs in August but overall added
2,000 workers in the first half of
2010 to fill places in its new equities
advisory division.
Hiring is expected to continue as
normal “across those parts of busi-
ness that are growing”, the firm said
in a statement. Growing areas
include fixed income, commodities
and equities and advisories, but
headcount is likely to expand at a
slower pace than during 2010.
Tim Hedger, deputy managing
director of City recruiting firm
Marks Sattin, said that although
finance jobs are overall being added
in London, the Asian job market is
much more vibrant. “The UK is fail-
ing to keep pace with global rival,
Singapore,” said Hedger, pointing to
the market for skilled accountants.
“In Singapore [it] is burning white-
hot: the average salary rise has hit 20
per cent this year, although we have
seen rises of 50 per cent offered to
tempt departing accountants to stay
at the firm,” he added.
BarCap to cut
hundreds of
London jobs
DOWNING Street yesterday insisted
the Prime Minister was perfectly
relaxed about disparaging comments
made by Mervyn King.
Before the election, King told the
US ambassador that David Cameron
and George Osborne were inexperi-
enced and relied too heavily on a
small number of advisers, according
to cables released by the WikiLeaks
foundation.
Cameron and Osborne, then leader
of the opposition and shadow chancel-
lor, also had a tendency to think about
economic issues in terms of party
political point scoring, King said.
Number 10 yesterday said Cameron
was relaxed about the comments, a
sentiment echoed by Osborne’s advis-
ers at the Treasury.
And the Prime Minister’s official
spokesman refused to condemn the
Bank of England governor’s com-
ments. Asked if King was doing a good
job, the spokesman replied “yeah”.
However, shadow defence secretary
Jim Murphy voiced concern, saying he
“has to take great care” with his opin-
ions.
Danny Blanchflower, a former
member of the Monetary Policy
Committee and persistent critic of the
governor yesterday called for King to
resign.
Number 10 is
relaxed over
King doubts
BY JULIET SAMUEL
BANKING

News
3 CITYA.M. 2 DECEMBER 2010
BY DAVID CROW
POLITICS

SNOW caused chaos around the UK
yesterday as road, rail and air services
were disrupted. Weather forecasters
said temperatures were set to freeze
overnight once again marking one of
the coldest starts to December in
more than 20 years.
Gatwick Airport, which was closed
today because of the cold snap, said it
would be at least 10am today before
the airport reopened leading to sig-
nificant disruption, delays and can-
cellations. Meanwhile Southeastern
trains, which runs services out of
London Victoria and Charing Cross
said it was operating an emergency
timetable today and that services will
finish early.
Also, half of Eurostar services
between London and Brussels today
have been cancelled, as have seven
out of 17 services each way between
London and Paris.
It’s snow joke as more
travel chaos is predicted
Commuters struggle into work yesterday Picture: PA
BY MATTHEW WEST
WEATHER

Eurozone Debt Crisis
4 CITYA.M. 2 DECEMBER 2010
THE Eurozone is to issue its first ever
region-wide bonds in January 2011,
said Klaus Regling, head of the
European Financial Stability Fund
(EFSF), yesterday.
Klaus said that the €440bn (£370bn)
bailout fund, which was set up in May
after the Greek rescue, would sell
€5bn-€8bn’s worth of debt with an
average maturity of 7.5 years. “If every-
thing goes to plan they will make a
profit,” he said, speaking during a
visit to Singapore. The fund currently
has a triple-A rating.
The bond issue heralds an unprece-
dented move towards a single debt
market for the Eurozone at a time
when many are discussing the possi-
bility of a euro break-up.
Peripheral Eurozone government
bond yields are at record highs, but
the EU is clearly hoping that the cre-
ation of a single euro bond will send a
strong signal to punitive markets.
European Central Bank President
Jean-Claude Trichet said this week
that markets should not “underesti-
mate the determination of govern-
ments” to save the euro and EU
officials have been anxious to demon-
strate that they are prepared to con-
sider radical measures to shore up the
single currency. The comments by the
EFSF’s Klaus were quickly followed by
indications by the US government
that it would willingly contribute to
an expanded EFSF via the
International Monetary Fund. “It is up
to the Europeans. We will certainly
support using the IMF in these cir-
cumstances,” an unnamed US official
said. The euro saw its first rally since
the Irish bailout after his remarks,
moving over $1.31 versus the dollar.
First Eurozone
bonds go on
sale next year
BY JULIET SAMUEL
WORLD ECONOMY

● The European Financial Stability Fund (EFSF)
is a sovereign bailout fund created in May using
funds from Eurozone members.
● It will issue €5bn-€8bn’s worth of bonds
early next year, with average 7.5 years maturity.
FAST FACTS | EFSF
1320
1310
1300
1330
29Nov 1 Dec 25Nov
ANALYSIS l Euro - dollar
USD/
EUR
600
400
200
800
Jan2010 Oct Jul Apr 2009
ANALYSIS l 10 year government bond
yields over German bunds
Greece
Basis
points
Spain
Ireland
Portugal
Source: Thomson/Reuters
ANALYSIS l 2011 share of Eurozone
gross sovereign debt
Source: Thomson Reuters,
OECDEconomic Outlook
*Germany, France,
Netherlands, Belguim, Austria,
Finland, Luxembourg
*Other
Europe
Italy
61% 23%
9%
Greece (4%)
Spain
Portugal (1.7%)
Ireland (1.8%)
Eurozone Debt Crisis
5 CITYA.M. 2 DECEMBER 2010
“Absolutely not. As a nation, we have
enough problems of our own, and need to
sort them out. We stayed out of the
Eurozone to avoid messes like this. That
seems like a good decision now, doesn't
it?”
RICHARD GRAINGER | TORUS INSURANCE
“I think we should consider helping with a
bailout in the current climate, though, we
need to look out for ourselves. We need
stable trade partners.”
“We haven't got the money as it is, so a
bailout would be difficult. I suppose every-
one is in the same boat financially as we
are. Still, I wouldn't expect other
Eurozone members to help us with
our troubles.”
EMMA FEHRENBACH | RSA INSURANCE
CLAIRE THOMAS | BELL & CLEMENTS
EMERGENCY overnight borrowing
from the European Central Bank
(ECB) rose to just under €2.5bn
(£2.1bn), figures showed yesterday, as
Eurozone debt fears continued to dom-
inate the mood in financial markets.
Banks usually refrain from using
the ECB’s overnight borrowing facili-
ty because the interest rate is 0.75 per
cent higher than the one per cent
that cash is available on offer at its
main refinancing operation.
It is typically well above market
rates.
Emergency
ECB rate rises
EUROPEAN Union officials are plan-
ning a new round of stress tests on
banking institutions, in an attempt to
remedy exams over the summer that
failed to predict the current effects of
the euro crisis on the banks.
However, the EU said it might not
publish the results of the next batch
of examinations of banking capital.
European economic commissioner
Olli Rehn conceded in Brussels that
the original stress tests were inconsis-
tently applied, and said the new
European Banking Authority that
opens in 2011 will have the power to
conduct more rigorous tests.
THE European Central Bank (ECB) is
expected to announce a resumption of
its special government bond-purchas-
ing programme today in a desperate
bid to stop the spread of the sovereign
debt crisis in its tracks.
But the markets are likely to be dis-
appointed by the scale of its interven-
tion, with most analysts saying that
the ECB would have to buy gilts on the
scale of the Federal Reserve’s $600bn
(£384bn) quantitative easing pro-
gramme to halt the euro contagion.
Capital Economics’ Jennifer
McKeown said: “Its purchases have
been really small compared to sover-
eign financing needs. To really make a
difference, it would probably need to
purchase about €500bn – seven times
the size of its purchases so far.”
The ECB has reluctantly stepped up
bond purchases slightly in recent
weeks and on Tuesday, ECB president
Jean-Claude Trichet suggested that it
might scale up its activities.
Many suspect the ECB has already
increased its intervention in second-
ary bond markets, for example during
yesterday’s auction of Portuguese debt.
Evolution Securities’ Elisabeth Afseth
said it “wouldn’t be a surprise if they
had bought paper ahead of the auc-
tion”.
The auction saw strong demand, for
€500m of 12-month debt, but Portugal
was forced to pay an unprecedented
premium for the cash. Yields rose to
5.3 per cent, versus 4.8 per cent just a
fortnight ago.
Most observers view these soaring
sovereign borrowing costs as unsus-
tainable for the Eurozone’s peripheral
members. However, unlike the Fed,
the ECB is only permitted to buy sover-
eign debt in the secondary market.
ECB purchase
not enough
EU plans tougher stress tests
BY JULIET SAMUEL
WORLD ECONOMY

BY MARION DAKERS
WORLD ECONOMY

THE Spanish government said yester-
day it planned to part privatise air-
ports operator AENA, which could be
worth up to €30bn (£25.3bn), as a way
of reducing its national debt.
The government said it would
allow private companies to take
stakes of up to 49 per cent in the
country’s airports and airport servic-
es’ business. It also announced plans
to privatise 30 per cent of its state lot-
tery.
Spain’s biggest airports, Madrid
and Barcelona, would be run private-
ly under operating concessions,
Prime Minister Jose Luis Zapatero told
parliament.
No decision has yet been made
about whether the part privatisation
will take the form of a financial part-
ner, or a stock market listing.
Spain to sell off
assets to pay debt
BY MATTHEW WEST
WORLD ECONOMY

WORLD ECONOMY

CITY VIEWS: SHOULD THE UK HELP TO BAIL OUT
SPAIN AND PORTUGAL? Interviews by Thomas Hamed
News
6 CITYA.M. 2 DECEMBER 2010
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HSBC’s Asian private equity unit has
been taken over in a management
buyout and renamed Headland
Capital Partners, it emerged yester-
day.
The sale is the first of five planned
management buyouts of HSBC’s pri-
vate equity businesses.
It is the latest to respond to pres-
sure from regulators on banks to spin
off their private equity activities.
HSBC is also in talks about manage-
ment buyouts of its private equity
units in the UK, US, Canada and
Middle East.
Headland’s management team will
own 80.1 per cent of the firm with
HSBC holding the rest.
The bank is keeping hold of its
investments in Headland’s funds. The
firm, which raised a $1.47bn fund in
2008, invests $40m-$150m for control-
ling or minority stakes in companies
based in greater China, South Korea,
south-east Asia and India.
The biggest of the five private equi-
ty businesses being spun out of the
bank is HSBC Specialist Investments
in the UK, which manages some $4bn
of assets, mostly in infrastructure and
property funds.
Several other banks are looking at
spinning off their private equity oper-
ations. Barclays Private Equity is
believed to be in talks about spinning
off from Barclays as part of plans to
raise its next buyout fund, LDC is con-
sidering a break from Lloyds Banking
Group and Citigroup has spun off
parts of its private equity arm.
HSBC spins off
Asian private
equity unit
NEWS International chief operating
officer Clive Milner has been placed
on gardening leave after a shake-up
led by chief executive Rebekah
Brooks.
He will formally leave the firm
early next year after more than 30
years. City A.M. understands his role
became superfluous to requirements
when Brooks reshuffled her executive
team after her arrival last year.
News International says his role will
not be replaced but his responsibilities
will be taken on by commercial chief
Katie Vanneck, general manager Will
Lewis, chief information officer Paul
Cheesbrough and Chris Longcroft, all
of whom have taken on the roles since
the arrival of Brooks.
Milner, 57, was responsible for pro-
duction, printing, distribution and con-
sumer-facing sales. He played a key role
in the development of News
International’s print plants at
Broxbourne, Knowsley and Eurocentral.
Chief operating
officer at News
Int steps down
BY MATTHEW WEST
BANKING

BY STEVE DINNEEN
MEDIA

Chief operating
officer Clive Milner
will leave News
International after
more than 30 years.
BUSINESS groups reacted with disap-
pointment to the news that only 12.5
per cent of FTSE 100 company board
directors were women yesterday.
Penny de Valk, chief executive of
the Institute of Leadership &
Management, reacted to research
from Cranfield University saying gov-
ernment enforced quotas were by no
means an ideal solution but would
soon become the only option if the
UK was to improve female representa-
tion on company boards.
“Clearly some level of intervention
from government is needed, whether
it is the Australian-style ‘comply or
explain’ system or the more directive
system of quotas,” she said.
Meanwhile, Katja Hall, director of
employment policy at the CBI, said
while companies were already taking
steps to boost the number of female
directors “more needs to be done.”
Still not enough women
directors of FTSE firms
Alliance Trust boss Katherine Garrett-Cox (l) and Burberry chief Angela Ahrendts Picture: PA
BY MATTHEW WEST
EMPLOYMENT

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14Oct 12Nov 15Sep
ANALYSIS l HSBC
p
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01 Dec
News
7 CITYA.M. 2 DECEMEBER 2010
THE US futures regulator unveiled
yesterday a key piece of its plan to
toughen rules on trading in the vast
swaps market, making clearer which
firms will have to set aside more
funds to cover their deals.
After last-minute wrangling that
underscored the strain facing agen-
cies trying to implement the biggest
financial regulatory overhaul since
the Great Depression, the proposal
defined which firms will be subject to
capital and margin requirements as
swap dealers and major swaps partic-
ipants.
An exempt commodity must have a
book value less than $100m (£64m),
have fewer than 15 swap counterpar-
ties, and less than 20 swaps as a deal-
er in less than a year.
It is expected that only certain
commodity hedgers can enter into
swap agreements.
The law also defines a “major swap
participant”, or firms with large swap
positions.
The law also gives major swap par-
ticipants status to participants with
“substantial counterparty exposure”
that may cause economic risk.
Congress meant this clause to
avoid a repeat of AIG’s failure, caused
by swaps and high leveraging.
US watchdog proposes
swap trader regulations
BY THOMAS HAMED
FINANCIAL SERVICES

NEWS | IN BRIEF
Starbucks seeks acquisitions
Starbucks yesterday laid out an ambi-
tious strategy for growing sales beyond
its cafes, saying it would look to expand
its packaged goods business through
acquisitions. The firm believes its pack-
aged coffee, bottled Frappuccino, Via
instant coffee and other products sold in
grocery stores can grow faster than sales
at its 17,000 worldwide retail cafes. The
coffee chain plans to accelerate that
growth by taking a bigger role in that
business, which includes cutting ties with
Kraft, its distributor of Starbucks coffee
to supermarkets for the past 12 years.
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News
9 CITYA.M. 2 DECEMBER 2010
MARTIN Broughton, the former chair-
man of Liverpool Football Club, has
made a key hire at his fledgling
investment fund and advisory fund,
Sports Investment Partners.
Sports Investment said yesterday it
is hiring Matthew Wheeler, who was
chief executive of Alan Pascoe’s API
Group in the 1990s. He then had a
four-year stint as the worldwide man-
aging director of Octagon until 2001.
In this time he sat on the board of
both DC United and Major League
Soccer in the US and Eintracht
Frankfurt of the Bundesliga in
Germany.
He developed a reputation for suc-
cessfully building market leading
sports agency propositions.
Others involved in the new firm
include Broughton’s son Michael and
Nic Couchman, a partner at the
sports business law firm Couchmans.
“Matthew’s experience in both run-
ning leading sports businesses and in
putting together deals that add value
to all parties will be invaluable as we
continue to examine potential invest-
ments in the sport industry,” said
Broughton, who is also chairman of
British Airways.
Broughton led a dramatic sale of
Liverpool to the Boston-based NESV.
Broughton makes key hire at sports fund
GERMAN energy giant E.ON has sold
its 3.5 per cent stake in Russian gas
firm Gazprom to market investors
and Russia’s state-owned investment
bank.
Vnesheconombank (VEB) will take a
2.7 per cent stake, while 0.8 per cent
has been placed in the market. E.ON
said the total proceeds from the sale
stood at €3.4bn, resulting in a book
gain of around €2.5bn.
The sale is part of E.ON’s aim of gen-
erating €15bn (£12.6m) over the next
three years through disposals and
cost-savings. The firm has previously
described the stake as a non-strategic
investment.
“We will use these proceeds to fur-
ther reduce our debt and to increase
our flexibility for making new strate-
gic investments. The sale of our
Gazprom stake does not alter our
Russia strategy,” said E.ON chief execu-
tive Johannes Teyssen.
It was reported last week that
Russian Prime Minister Vladimir
Putin, also chairman of VEB, dis-
cussed the sale of the stake with
German chancellor Angela Merkel
during a meeting in Berlin.
E.ON sells Gazprom stake
BY MARION DAKERS
ENERGY

THE CHRISTMAS bonus season should
be good for UK accountants, but their
salaries look set to rise at below infla-
tion rates, a new survey has found.
Six in ten City businesses expect to pay
their finance staff bonuses this year, the
survey by recruitment consultancy
Ambition found – and while account-
ants on average expect a bonus of 8.7 per
cent of salary, employers anticipated pay-
ing an average 10.8 per cent.
But while finance staff surveyed
expected five per cent salary rises in
2011 – almost two percentage points
above inflation – employers said they
expect to offer an average 2.6 per cent
raise, which falls below the current 3.2
per cent inflation rate.
Jamie Lyon, head of employer servic-
es at the ACCA, said accountants
recognised that economic conditions
had been challenging and bonuses
may not be as high as in booms.
“Finance departments are the
unsung heroes of businesses and we
support our members in trying to get
the best remuneration,” he said.
Based on current average account-
ants salaries of £42,000, bonuses
should average £4,536 – £880 higher
than expected, creating a total bonus
pot for all UK qualified accountants of
up to £3.1bn. In 2009 accountants’
total bonus pot was £0.57bn, an aver-
age of £1,974 each.
“It’s understandable that staff now
want to get their pay back in line but
the fact that businesses will be paying
higher bonuses than expected will go
some way to appeasing any disappoint-
ment,” said Ambition managing direc-
tor Tim Gilbert.
In March, the Institute of Chartered
Accountants in England and Wales
reported that members’ salaries were
down about two per cent on 2009’s
level, to an average £79,100. Bonuses
had fallen 26 per cent over the year.
Accountant
pay flat but
bonuses up
BRITISH financial services group
Brewin Dolphin yesterday said it post-
ed a 25 per cent increase in underly-
ing pre-tax profits during the year to
26 September as it brushed off the
impact of higher regulatory costs.
Brewin Dolphin said profits exclud-
ing redundancy costs, contract renew-
al payments and the amortisation of
client relationships was £40.2m for
the full-year.
After exceptional costs, pre-tax
profits were £31.4m, a 43 per cent
increase from a year earlier.
Brewin Dolphin said the year had
seen a “material rise” in the costs of
regulation as British authorities
shake up selling of financial services
after the financial crisis and that the
company planned to find ways to mit-
igate the cost.
“Your board believes that the
impact of regulation upon the busi-
ness is unlikely to reduce in the fore-
seeable future,” the company said.
The investment management busi-
ness, which accounted for 96 per cent
of group turnover, saw an 18 per cent
rise in revenues while total funds
under management increased 13 per
cent to £23.3bn.
The company proposed a final divi-
dend of 3.55p per share, bringing the
total dividend to 7.1p.
Brewin says
regulation
hits profits
GENERAL MOTORS’ sales rose 11 per
cent in the US last month, slightly
less than industry-wide predictions
but providing a sign of returning con-
sumer demand.
GM said yesterday its four core
brands – Chevrolet, Buick, GMC and
Cadillac – clawed back some market
share with a 21 per cent rise in sales
compared with last year. The sales fig-
ures were GM’s first since its $23bn
(£14.8bn) IPO last month.
GM said its average transaction
prices were up $1,300 in November
from a year earlier, while incentives
were down. GM said growing pent-up
demand for cars will be released as
the economy continues to improve.
Ford also reported US sales rose
24.3 per cent in November from the
same period in 2009, with 147,338
vehicles sold.
GM car sales jump 11pc
AUTOMOTIVE

E.ON boss Dr Johannes Teyssen says the proceeds will be used to pay down debt Picture: GETTY
BY HARRY BANKS
FINANCIAL SERVICES

BY DAVID HELLIER
LEISURE

BY ALISON LOCK
ACCOUNTANCY

140
130
120
150
14Oct 12Nov 15Sep
ANALYSIS l Brewin
p
148.00
01 Dec
PRUDENTIAL boss Tidjane Thiam
unveiled his strategy for expand-
ing the company in Asia in the
wake of the firm’s botched bid for
AIA, sending shares up 5.6 per
cent to 600p yesterday.
Thiam, who came under intense
shareholder pressure to stand
down following his £22.7bn bid
for the Asian life insurer, told
investors he aims to double Asian
premiums by 2013, delivering
£300m to group turnover.
He said a more diverse product
mix coupled with better returns
on investments and benefits of
scale would contribute to the
gains.
“Prudential aspires to be one of
the winners in the post-financial
crisis world, with all of our busi-
nesses performing strongly. Our
strategy is sound and we continue
to pursue it with the operating
discipline that has delivered excel-
lent results on all measures over a
sustained period,” said Thiam.
Shore Capital analyst Eamonn
Flanagan said the targets for
growth and cash were ambitious.
“We view these as challenging
especially given the current eco-
nomic climate, but they should
demonstrate the virtue and scale
of the group’s operations in Asia.”
Prudential reported £713m pre-
tax profit in 2009 and a stronger-
than-expected 17 per cent rise in
quarterly sales in November,
helped by growth in its Asian mar-
kets.
Prudential plans to
double sales in Asia
BY MARION DAKERS
INSURANCE

News
10 CITYA.M. 2 DECEMBER 2010
620
600
580
640
660
14Oct 12Nov 15Sep
ANALYSIS l Prudential
p
600.00
01Dec
Tidjane Thiam
had to abort
plans to acquire
AIA after share-
holder unrest
Picture: GETTY
Thiam is right to look East
TIDJANE Thiam’s disastrous attempt
to acquire AIA hasn’t snuffed out his
love affair with Asia. Already booking
a third of sales in the region, Thiam
wants to go much further by dou-
bling Asian premiums over the next
three years.
Having tested shareholders’
appetite for a transformational
acquisition – and found it wanting –
Prudential will likely have to grow
organically, or by snapping up smaller
bolt-ons.
Initially, Thiam’s target seems
somewhat over-optimistic. But there
is huge hope for expansion in Asian
emerging markets. In the UK, the life
insurance penetration rate is 13 per
cent while Japan’s is 8.3 per cent. In
India and China it is far lower, around
four and two per cent respectively.
McKinsey estimates that 40 per
cent of growth in the life assurance
market will be generated by Asia,
while the compound annual growth
rate in China will exceed 15 per cent
for the next five years. With markets
at home maturing, Thiam’s decision
to look east for inspiration could still
pay off.
BOTTOMLINE
Analysis by David Crow
IT is that time of the year again.
Today, City A.M. begins our annual
readership survey. As a quality news-
paper provided free of charge, it is
important for us to understand who
our readers are and what you think of
us, and this survey is one of the main
vehicles we have to achieve this.
We know that many of our growing
band of readers will be keen to help –
and spend just a few minutes filling in
our very simple and straightforward
survey at www.cityamsurvey.com – but
as good capitalists here at City A.M. we
also believe in incentives. And in
today’s somewhat depressed climate,
we realise that the chance to win a
brilliant holiday in the sun is just what
the doctor ordered.
So everybody who fills in the sur-
vey will be entered into a draw for an
all-inclusive trip for two to one of
Sandals' Luxury Included resorts in
beautiful St Lucia, a package which
includes return flights
(see terms and conditions below;
heartfelt thanks to the company for
making this amazing prize possible).
To add further spice to the survey,
we will also be entering survey par-
ticipants into a daily draw to win a
bottle of Bollinger.
We reached our highest ever audit-
ed circulation in October 2010 and
have very ambitious plans for the
future. We are by no means finished
improving the paper and we are very
keen to hear any thoughts or sugges-
tions you may have.
Thanks for reading City A.M., thank
you for your loyalty and we look for-
ward to receiving your feedback at
www.cityamsurvey.com
www.cityamsurvey.com
Enter our reader survey at
www.cityamsurvey.comfor the chance to
a truly amazing
week-long holiday
Terms and Conditions – CITY AM. 7 nights’ accommodation is provided for two adults at any Sandals resort in St. Lucia. Accommodation is on a Luxury Included® (all-inclusive) basis in a deluxe room. Resort transfers and return flights from London to St. Lucia are included but domestic
transfers are not included. There is no cash alternative to the prize and spending money is not included. Holiday insurance is not included and must be purchased before travel. The prize is subject to availability, cannot be taken during peak seasons (Easter, July, August, December and New Year) and
must be confirmed no later than 30 days and no earlier than 90 days prior to departure. Once dates are confirmed there will be an administration fee for any changes made to the reservation. This fee varies in accordance with the airlines. The prize is strictly non transferable, non refundable, and
is subject to Sandals Resorts’ normal terms and conditions. The prize must be taken before 30 November 2011. Sandals’ resorts are for couples. Sandals Resorts reserve the right to relocate prize winners from the stated resort to an alternative Sandals resort if rooms become unavailable for the
travel dates requested. By entering this competition you consent to your details being shared with our parent company located outside the European Economic Area. The competition is not open to employees and their immediate families of promoter Unique Vacations (UK) Ltd and their associated
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EDITOR’S LETTER
ALLISTER HEATH
WIN
FOR TWO
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RESORTS IN BEAUTIFUL SAINT LUCIA
SAGE marked expectation-beating
results yesterday with a top-level
reshuffle. New chief executive Guy
Berruyer, who recently took over from
long-standing boss Paul Walker,
announced he will promote the two
rivals he beat in the leadership race.
Paul Stobart, head of the UK and
Ireland, will take responsibility for the
whole of Northern Europe and Paul
Harrison, chief financial officer, will
also take responsibility for M&A.
Head of Sage France Pascal Houillon
will replace the retiring Sue Swenson
as North America chief.
Sage reported pre-tax profit up 20
per cent to £319.9m on revenue flat at
£1.44bn.
Organic revenue grew by three per
cent in the second half, with software
revenue up two per cent, marking the
first return to growth since the second
half of 2007.
Sage reshuffles execs as
profits rise 20 per cent
BY STEVE DINNEEN
TECHNOLOGY

News
12 CITYA.M. 2 DECEMBER 2010
Clockwise from top left: New Sage chief
executive Guy Berruyer, Pascal Houillon
will become North American chief, Paul
Harrison, chief financial officer will take
responsibility for M&A, Paul Stobart, will
now be responsible for Northern Europe
265
250
280
290
14Oct 12Nov 15Sep
ANALYSIS l Sage
p
271.00
01 Dec
raise £8m next week in London, with
a 1958 250 GT LWB Ferrari (pictured)
expected to go for between £800,000-
£1m and a 1930 Rolls-Royce Phantom
II Tourer on offer for £180,000 to
£200,000.
“These are the ultimate Christmas
presents,” says COYS MD Chris
Routledge. You
don’t say.
STILL FIGHTING
Tragic timing for the Institute for
Turnaround yesterday as it convened
its annual awards to celebrate
British businesses with a knack for
survival in hard times.
Just as the institute was preparing
to hand its private company turn-
around of the year award to Bernard
Matthews Ltd, the turkey producer,
the firm’s founder Bernard
Matthews passed away.
“Bernard Matthews fought
off tough competition to
win,” the institute
announced regardless,
five days after the
announcement of
Matthews’ death.
Whoops.
CITY PUBLIC AFFAIRS
LANDSCAPE DUE FOR A
SHAKE-UP AS TIM BURT
LEAVES BRUNSWICK
TIME for some fresh blood in City
public affairs, it seems, with the
founding of a brand new financial
PR firm by Brunswick partner Tim
Burt.
Burt is set to launch Stockwell
Group along with the former chief
executive of Maitland Philip Gawith
and Financial Dynamics co-founder
Julian Hanson-Smith, both of whom
will be on the board.
And Gawith, Burt and former
Grandfield’s chief executive Nick
Boakes will be taking equal shares
alongside a minority stake for
Hanson-Smith’s Iceni Capital, the
private equity house.
But Burt’s colleagues are still in
the dark as to his rationale, admit-
ting to being “shocked” at the bold
move. After all, it’s not everyday that
a senior Brunswick guy defects to
found a rival firm.
Perhaps Burt was inspired by a
similar move by former Brunswick
partner Andrew Grant a decade ago,
when he struck out to found
Tulchan Communications. Tulchan
isn’t doing too badly with the likes
of M&S, Whitbread and ITV on its
books.
Meanwhile, The Capitalist is happy
to see that Gawith has found himself
a new home after losing out on his
CEO role at Maitland to Neil
Bennett. Whenever the City closes a
door, it opens a window…
EYES ON THE PRIZE
IT turns out Brits have some odd
expectations of the next decade,
according to MSN’s Pulse of the
Nation study out yesterday. The sur-
vey quizzed 100,000 people on their
vision of the UK in 2025 and it
turned up some interesting – and
depressing – results.
More than half of those asked said
they think that celebrity culture will
become a registered profession in 15
years, but there’s no rest for the
wicked: an overwhelming 74 per
cent of people said the retirement
age could reach 70 by then.
On the brighter side, 22 per cent
reckon humans will have reached
Mars, with four per cent going so far
as to envision a permanent base
being set up. Let’s hope the grounds
for the next space race aren’t quite
as traumatic as the Cold War.
But at least humanity is also
expected to advance in other ways.
Brits seem to have their eyes on a,
ahem, bigger prize than the red
plant: 40 per cent think that penile
implants and “man boob” surgery
will be commonplace by 2025.
A brave nude world awaits.
GERMAN GHOSTS
EUROPE is amply aware that its
biggest economy isn’t keen to
become a cash cow for its bankrupt
neighbours, but fears in
Germany could be
reaching fever pitch
for an additional rea-
son, according to
Frankfurt University
professor Wilhelm
Hankel. “Germany can-
not keep paying for
bailouts without going bank-
rupt itself,” he said, adding that peo-
ple remember losing their savings
due to hyperinflation in the ’20s.
“You cannot find a bank safe deposit
box in Germany because every single
one has already been taken and
stuffed with gold and silver.”
Time to start clearing space under
the mattress.
VINTAGE HEAVEN
City vintage car lovers have a lot of
presents to look forward to this
Christmas – £8m’s worth of gifts, to
be precise. COYS auction house,
which specialises in rare vehicles,
will hold a sale which is expected to
Former Maitland chief executive Philip Gawith has found a new home.
The Capitalist
13
EDITED BY
JULIET SAMUEL
GOT A STORY? EMAIL
thecapitalist@cityam.com
Bernard Matthews passed away last week
Colleagues of
Brunswick
partner Tim
Burt admit to
being
“shocked” at
his departure
to found a
rival.
CITY EYE
TRADERS at the London Metal Exchange make their voices heard in the Ring, which is
one of the last open outcry pits in the world. The exchange, which was founded in 1877,
deals in aluminium, copper, tin, nickel, zinc and lead among other traded metals. The
exchange also started trading plastics in 2005. Picture: Micha Theiner/City A.M.
INDUSTRIAL growth in the US still
offers hope for an economic recovery,
a survey released yesterday indicated.
The ISM manufacturing index,
which assesses the state of US indus-
try, came in at 56.6 for November –
displaying growth slightly above the
rate expected by economists.
There was a large dip in the rate of
production growth, which fell 7.7
points to 55. Yet the positive figure,
over 50, still reflects a reasonable
increase in production, after October
recorded a huge increase of 6.2 points
on September.
The pace of expansion in employ-
ment also eased slightly to 57.5 in
November from 57.7 in October.
The result mirrored the results of
the the ADP employment survey,
which reported an increase in private
sector employment of 93,000 from
October to November.
And ADP also revised up the
employment figures for October,
showing an increase of 82,000. The
data provide a boost for the economy,
although some economists warned
that increases would have to hit six
figures per month in order to signifi-
cantly improve America’s employ-
ment slump.
On Tuesday night Fed chairman
Ben Bernanke spoke of the “social
and economic” consequences of
unemployment, which currently
stands at 9.6 per cent. Almost 40 per
cent of America’s unemployed have
been out of work for over six months,
he said. Yet more positive employ-
ment news came yesterday from
revised Department of Labor figures.
The department said that the num-
ber of hours worked by employees
increased by 1.4 per cent in the three
months to September – up from the
previous projection of 1.1 per cent.
Meanwhile construction spending
rose by 0.7 per cent in October, sur-
prising economists who had expected
stagnation.
Promising lift
for production
helps US jobs
BY JULIAN HARRIS
US ECONOMY

Economic News
14 CITYA.M. 2 DECEMBER 2010
Manufacturing
growth is being
seen around the
world, shown
where PMI is
greater than 50.
In Europe (bottom
left) periphery
countries are still
struggling.
RECOVERY in the Eurozone continues
to be driven by Germany and France,
new figures revealed yesterday.
Manufacturing growth showed a
modest increase in November across
the single currency area.
The Purchasing Managers Index
(PMI) for manufacturing rose to 55.3,
up from 54.6 in October.
French PMI hit its highest rate for a
decade, shooting up to 57.9, from
October’s 55.2.
Meanwhile in Germany, the
increase in manufacturing employ-
ment rose at the second highest rate
in the history of the index.
Yet the situation remains bleak in
peripheral areas of the Eurozone, par-
ticularly troubled states such as Spain
and Greece.
Manufacturing PMI in Spain
dropped to 50, the rate at which no
growth is recorded. Output, new
orders and employment all contract-
ed, dropping below the 50 mark.
The decline of Greek manufactur-
ing continues, with PMI still sunk at
43.9, despite a minor improvement of
0.3 points.
“While there was a slight upturn in
Ireland, its rate of growth is way
below that needed for meaningful
recovery,” said Chris Williamson, an
economist at Markit.
Germany drives
manufacturing
up in Eurozone
EUROZONE ECONOMY

RECORD breaking statistics are point-
ing to a resurgent UK economy,
according to authoritative data
released yesterday.
Jobs growth in manufacturing for
November raced forwards at its
fastest rate since 1992, when the
Markit/CPI Purchasing Managers
Index (PMI) began collecting data.
And UK manufacturing growth hit
a sixteen year high, after production
rose for 18 months in a row.
The index increased to 58 in
November, and October’s rate was
revised up to 55.4. The PMI is used as
an indicator of economic activity, and
all figures above 50 indicate a rise.
The figures reflect stronger output
growth and inflows of new work and
new export orders, the authors said.
“Job creation was attributed to the
ongoing economic recovery,” they
added. On Monday employment fore-
casts were revised upwards by the
Office for Budget Responsibility.
The private sector is forecast to add
1.5m jobs by 2015, with unemploy-
ment falling to around six per cent.
“Today’s survey supports our view
that growth this quarter will be at
least 0.5 per cent,” said Hetal Mehta of
Daiwa Capital Markets.
“Any notion that the Bank of
England is poised to implement more
quantitative easing in the near term
should now be dispelled,” she said.
Yet manufacturing only accounts
for 12.8 per cent of GDP, warned
Howard Archer of IHS Global Insight.
“Nonetheless, this is a superb, encour-
aging survey,” he added. “And the
more forward looking elements
showed improvement.”
Industry bounces back in UK
INDIAN industry continues to grow
after suffering a decline in 2009, data
accrued by HSBC revealed yesterday.
In November industry growth rose
to above the long-run average, acceler-
ating for the second successive month.
The Purchasing Managers Index
(PMI) jumped to 58.4 in November, up
from 57.2 in October.
The volume of new orders and
export business also grew, the former
reaching its strongest rate for four
months.
Yet employment in manufacturing
was slightly down. Respondents to the
survey cited workers leaving for higher
wages in other areas.
And inflation remains a problem,
with output price inflation now sus-
tained for over a year.
“A spike in backlogs suggest tight
capacity, which together with rising
prices underscores the need for contin-
ued monetary policy tightening,” said
Leif Eskesen, chief economist at HSBC.
Indian factory output recovers well.....
BY JULIAN HARRIS
UK ECONOMY

BY JULIAN HARRIS
ASIA ECONOMY

HIGH inflation is haunting China’s
industrial sector, data from HSBC
showed yesterday.
Input prices shot up at the fourth
fastest rate in the history of the
Purchasing Managers Index (PMI).
Economists pointed to low supply of
goods, and panic buying in the face of
further price rises. Prices of cotton,
grain, oil and steel all increased.
And manufacturers passed on the
higher costs to consumers, with “facto-
ry gate” prices rocketing at a record
rate for the index.
Consumer prices hit a 25 month
high in November, with food inflation
surging beyond 10 per cent.
In response, Beijing could increase
rates by a quarter of a per cent, said
economist Hongbin Qu from HSBC.
However, economic growth contin-
ues to push forwards in China. The
PMI, which measures manufacturing
business conditions, was 55.3 for
November, up from October’s 54.8.
.....but high inflation scares China
BY JULIAN HARRIS
ASIA ECONOMY

Economic News
15 CITYA.M. 2 DECEMBER 2010
CUTS in government spending will
not derail the British recovery, the
Bank of England’s chief economist
said last night.
Spencer Dale insisted that current
monetary policy should ensure that
the recovery continues, even though
some households directly affected by
the cuts would suffer.
Earlier in the week the Office for
Budget Responsibility said that
growth for this year would hit 1.8 per
cent, higher than previous forecasts.
“The economy is likely to grow at
rates around or a little above its his-
torical average," Dale said.
HOUSE prices fell by another 0.3 per
cent in November, mortgage-lender
Nationwide announced yesterday.
The news follows an even sharper
drop in the previous month, as prices
fell 0.7 per cent on September.
Prices have either fallen or stagnat-
ed since June, according to
Nationwide’s statistics.
The average house price in the UK
is now £163,398, whereas in June
houses were averaging over £170,000,
more than 3.9 per cent higher.
The announcement echoes recent
gloomy news for the housing market
from other sources.
On Monday the Bank of England
declared that mortgage approvals
sank to an eight month low in
October, totalling just 47,185.
And that afternoon the Office for
Budget Responsibility (OBR) forecast a
3.1 per fall in prices for the coming
year, despite predicting strong eco-
nomic growth and a rise in employ-
ment.
But these factors are unlikely to
make much difference to the housing
slump, according to Howard Archer
of IHS Global Insight.
Low real wages and continuing dif-
ficulties in securing mortgages (par-
ticularly for first time buyers) are
likely to maintain the housing mar-
kets woes, he said.
And this is despite low interest
rates and the stamp duty holiday for
first time buyers.
“House prices will lose around 10
per cent of their value from peak
2010 levels by the end of 2011,” he
said.
“This would see average house
prices fall to £153,100 as house prices
have another 6 per cent to fall.”
The pessimistic outlook is not
equally spread throughout the UK.
“London continues to outperform the
rest of the country, and should be
seen as a separate market in its own
right,” said Peter Rollings of estate
agent Marsh & Parsons.
Demand from foreign buyers and
cash buyers is circumventing the
credit problems in the UK mortgage
lending sector, he said.
“And with bonus season on the
way, we anticipate many City workers
taking advantage of the increased
choice of properties on the market,”
he added.
House prices
down 3.9 per
cent on June
BUSINESS closures have hit their
highest level for ten years, according
to figures the Office of National
Statistics (ONS) released yesterday.
Closures were up 26 per cent in
2009, amounting to 279,000 compa-
nies winding up their operations.
Research and development (R&D)
was also down in 2009, by 4.1 per
cent, the ONS announced.
This week the government said it
would cut corporation tax to 10 per
cent on UK produced patented goods.
The plans were criticised by the
Institute for Fiscal Studies, who said it
would harm tax receipts and add
complexity to the tax system.
But Alec van Gelder of the think
tank International Policy Network
said the policy would “stimulate
innovation, investment, and jobs.”
Starts
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279,000 business
closures reported
UK retail investors have invested a
record amount in emerging market
funds, it was revealed yesterday.
The Investment Management
Association (IMA) showed net sales of
£336m for October. “Appetite for glob-
al investing continues, with the glob-
al emerging markets sector reporting
its highest sales on record in October,”
said Richard Saunders, Chief
Executive at the IMA.
Total net retail sales were £2bn in
October, taking the total for the year
to £20bn. Net ISA sales for October
totalled £44.6m, the lowest level since
February last year.
Investors look
to new markets
UK recovery on
track, says Dale
BY JULIAN HARRIS
MORTGAGES

UK ECONOMY

EMERGING MARKETS

Economists warn
that house prices
could continue to
tumble throughout
the next year.
Picture:
Micha Theiner
/City A.M.
BY JULIAN HARRIS
UK ECONOMY

News
17 CITYA.M. 2 DECEMBER 2010
News
18 CITYA.M. 2 DECEMBER 2010
Lord Sugar gives apprentices his shopping list
A
HEAVENLY start to this week’s
Apprentice. The final seven
gathered on top of Tower 42
and as the morning light
bathed Lord Sugar in an ethereal
glow, a chorus of angels could be
heard. Quite what this had to do with
getting chicken feet on the cheap
wasn’t clear.
This was the wheeling and dealing
challenge. No elaborate pitches or
marketing bombast to hide behind,
just good old fashioned haggling and
it was boys against the girls.
Given a list of ten items, the candi-
dates had to find everything from a
Singer sewing machine to a white
truffle.
SELLING TRUFFLES
“Truffle? That’s the food, isn’t it?”
asked Jamie. He wasn’t waiting to
find out: his tactic was to hit the
streets immediately, with him work-
ing alone and Chris and Stuart work-
ing as a double act.
Liz, leading Apollo, took a more
measured approach, working out
what each item was and where
best to find it. Not that this fil-
tered down to the rest of the
team. Trying to sniff out the
elusive truffle, Stella
thought she’d call up Marco
Pierre White’s restaurant
and see if he could help.
Sadly, Marco wasn’t avail-
able. Not to worry, she’d try
Gordon Ramsay. That’s the
spirit.
Despite this, the
girls did well, get-
ting all 10 items
with relative
ease. The boys
had more trouble.
Jamie in particular had a stressful
day. After trawling jewellery shops
he finally found out what a 22
carat gold tikka was before
spending hours tracking down
a four-metre worktop surface.
Man hasn’t hunted this mono-
maniacally since Moby Dick.
CHRIS’ AM DRAM
Meanwhile, Chris went in for a
bit of amateur dramatics. To
get a good deal he spun
a variety of tales
involving a tar-
tan-loving gran
in need of a
wedding pres-
ent and a taxi-driver brother about to
fail his exams.
Incidentally if you’re looking for a
business investment, Chris is good
friends with a Nigerian prince.
But despite their haphazard style
and incomplete shopping trolley, the
boys still won and no one was as
shocked as they were.
With the girls back in the board-
room, it all came down to that truf-
fle, finally bought by Laura and Stella
from a Knightsbridge restaurant.
Needless to say they didn’t pay cost
price.
Lord Sugar made his decision and
this time there was no room for hag-
gling.
Laura, you’re fired.
THE APPRENTICE REVIEW
GRAEME ALLISTER
WELLSTREAM has entered into for-
mal talks with General Electric and
National Oilwell Varco over a poten-
tial £755m bid, it is understood.
The oil pipe-maker is said to have
allowed both firms access to its books
as it tries to negotiate a higher offer
from the two bidders.
GE said in October Wellstream had
rejected an approach it made which
valued the company at £755m.
“This is what we’ve been expecting:
that the reason that there was a delay
was because GE and National Oilwell
Varco were doing their due dili-
gence,” said Royal Bank of Canada
analyst Todd Scholl.
Scholl said he thought any new bid
would have to be pitched at between
775p and 800p per share and proba-
bly closer to 800p.
Wellstream makes flexible pipes
used by oil companies in deep water,
an area set for strong growth due to
major finds in Brazil, where state-run
oil firm Petrobras accounted for
around 60 per cent of Wellstream’s
business in 2009.
“It’s important that these compa-
nies make sure that Petrobras is on
board with their acquisition of the
company because clearly that’s the
future driver of growth,” Scholl
added.
GE said in October it was “disci-
plined” about deals and it might not
make another approach or could do
so “on less favourable terms”.
Wellstream said on 21 September it
had received a number of approach-
es, sending its shares up by 29 per
cent that day. The share price has
since hovered between 740p and
760p, falling by one per cent overall
in the last month.
Yesterday, the shares closed up 1.2
per cent at 742p.
Wellstream, whose main competi-
tor in flexible pipe making is the
French offshore engineering group
Technip, has been a frequent subject
of takeover speculation.
Market chatter has often linked it
to Europe's largest oil services compa-
ny, Saipem.
Wellstream
opens books
to its suitors
BY HARRY BANKS
ENERGY

CONGLOMERATE Dubai Holding’s
main unit has extended a $555m
(£355m) loan due on 30 November by
one month, reinforcing niggling
doubts over Dubai’s ability to resolve
its debt troubles.
This was the third extension for
Dubai Holding’s loss-making hospi-
tality and property arm, Dubai
Holding Commercial Operations
Group (DHCOG). It previously
delayed the loan in July and
September.
“The extension is required to
finalise a new long-term facility,” the
company said yesterday.
Analysts say there was general
optimism that Dubai would be able
to successfully restructure debt at
Dubai Holding and its units.
State-owned conglomerate Dubai
World sent global markets reeling
last year when it requested a stand-
still on almost $25bn of debt. The
company secured unanimous
approval for its restructuring plan in
under a year.
DHCOG, a unit of the conglomer-
ate owned by the Gulf Arab emirate’s
ruler, took a big hit from its exposure
to Dubai’s property crash and said in
June it might resort to asset sales to
deal with its debt after posting a
$6.2bn loss for 2009.
Dubai Holding extends £355m loan
DUBAI

BEST OF THE BROKERS
ANALYSIS l SAB Miller
1,950
2,050
2,150
6 Sep 24 sep 14 Oct 3 Nov 23 Nov
p
2,083.00
01 Dec
SAB MILLER
Nomura rates the brewer “reduce” with a
target price of £19.75. The broker has con-
tinued concerns about the US beer market,
and that planned investment in marketing
and IT would hold back any increase in
margins. Nomura notes SAB’s recent claim
that revenue growth would be around two
per cent, slightly below earlier guidance.
ANALYSIS l Tesco
420
410
430
440
6Sep 24sep 14Oct 3Nov 23Nov
p
414.20
01 Dec
TESCO
Jeffries International rates the supermar-
ket “hold” with a target price of 450p. The
broker expects the firm’s Q3 results next
week to confirm pedestrian UK trading
momentum that could add to a short-term
drag on shares. It predicts quarterly sales
growth of six per cent, making it the slow-
est growing of the big four grocers.
ANALYSIS l Shaftesbury
435
425
445
455
465
6Sep 24sep 14Oct 3Nov 23Nov
p
444.40
01 Dec
SHAFTESBURY
Liberum Capital has upgraded the property
company to “hold” from “sell” with an
upgraded target price of 430p. The broker
sees founder and chief executive Jonathan
Lane’s retirement as a potential drag on the
share price, but is more optimistic about
rental value growth. It has raised its 2011
net asset value forecast by one per cent.
To appear in Best of the Brokers email your research to notes@cityam.com
Cushman & Wakefield
Real estate services firm Cushman &
Wakefield has announced the appoint-
ment of Tony Edwards and Simon Wild
as partners in its southern retail agency
team. They both move over from
Churston Heard, which was bought by
Jones Lang LaSalle in 2008.
MGM Advantage
Retirement specialist and mutual socie-
ty MGM Advantage has appointed
Brian Harrison and Isabel Hudson as
non-executive directors. Harrison will
be the firm’s new chairman of the risk
committee while Hudson will sit on the
investment committee among other
duties.
Harrison has over 30 years’ experi-
ence in the pensions business, having
begun his career at the Gresham Group
and worked at Friends Provident.
Hudson also has 30 years’ experience,
but in insurance. She has worked at
Prudential UK and set up a specialist
annuity company Synesis Life in 2006.
Generation Investment
Generation Investment Management,
the investment management firm, has
appointed Mike Ramsay a partner in its
London office. Ramsay moves from the
Carlyle Group, where he was global
head of leveraged finance. He has also
worked at Prudential M&G.
Aviva Investors
Bart Coenraads has joined Aviva
Investors as head of real estate multi-
manager, Asia-Pacific. He will be
responsible for the development of the
firm’s strategy in this area and will be
reporting to Ed Casal.
PricewaterhouseCoopers
PwC has hired Nigel Vooght as head
of its financial services business, replac-
ing Jeremy Scott. Vooght will lead
PwC’s global banking and capital mar-
ket services.
Metro Bank
Mark Price has been appointed man-
aging director of commercial banking
at new high-street bank Metro Bank.
Price will be responsible for building up
the firm’s business clients.
CITY MOVES | WHO’S SWITCHING JOBS Edited by Juliet Samuel
HSBC
HSBC has announced the appointment of
Hossam Alsaady as head of its Saudi Arabia
team within the London-based Middle East and
North Africa division of its private banking
business. Alsaady is moving over from his role
at NCB Capital in Jeddah, where he has held
several senior positions, most recently head of
strategy. At HSBC, he will be reporting to
Bassem Snaije in London and Sobhi Tabbara in
Geneva.
+44 (0)20 7557 7245
morganmckinley.com
To appear in CITYMOVES please email your career
updates and pictures to citymoves@cityam.com SPECIALISTS IN GLOBAL PROFESSIONAL RECRUITMENT
in association with
THE UK has the worst take-up of
superfast broadband of any major
developed nation, new research by
the communications watchdog has
revealed.
Just 0.2 per cent of people in the UK
have access to broadband speeds of
30Mbits a second or higher. This com-
pares to 34.4 per cent of people in
Japan, 12 per cent in Sweden and 7.1
per cent in the US.
Ofcom says it expects this to
increase as BT rolls out its Infinity
broadband package and Virgin con-
tinues to expand its cable offering.
With ambitious rollout plans that
include connecting rural areas to
superfast networks, Ofcom estimates
the UK will have the highest prolifera-
tion of speeds over 30Mbits a second
in Europe by 2015.
The UK also lags behind in super-
fast mobile networks, with a maxi-
mum possible download speed of just
7.2Mbits a second – level with France
but far behind Sweden with 100Mbits
a second. Japan, Australia and Poland
all have theoretical download speeds
of 42Mbits a second.
Ofcom also expects this to rise sig-
nificantly over the next two years,
with two major spectrum auctions
coming up which will relieve pres-
sure on mobile data networks. The
most significant will be the auction
of the 800MHz spectrum which is cur-
rently used for analogue TV but will
be available after the digital
switchover is complete.
The study of communications
trends also shows that the UK is
cheaper than any major European
nation or the US for mobile, broad-
band and TV.
The UK leads Europe for internet
purchases, with the average online
spend per person reaching £1,031 –
almost twice the next highest
nations, France with £595 and
Germany with £588.
Ofcom believes this is down to the
higher proliferation of credit cards in
the UK, the early growth of Amazon
here and the tradition of catalogue
purchases. The share of online adver-
tising is also higher in the UK than in
any of the comparator countries, at
27 per cent. The US has 17 per cent
and Japan has 15 per cent.
IPTV has been slow to take off in
the UK but this is expected to grow
when BBC-backed venture YouView
launches next year.
ROYAL BANK OF SCOTLAND (RBS)
finalised the sale of its WorldPay busi-
ness yesterday, while new owners
Advent International and Bain
Capital pledged to invest £200m in
the payment processing firm.
The EU-enforced sale of the £2bn
business, agreed in August, leaves
RBS with a 20 per cent stake in the
company. Advent and Bain promised
at the time to invest in technology
platforms and product range for
WorldPay, which processes credit and
debt card payments. The new owners
have announced they will invest
£200m on expanding the business,
which will create 250 jobs in the next
six months.
Ron Kalifa, who will remain chief
executive at WorldPay following the
sale, said: “Independence and private
ownership give us the potential to
transform the payments industry
through long term investment in our
technology, our people and our busi-
ness.”
Advent and Bain’s respective man-
aging directors James Brocklebank
and Robin Marshall will take up
places on WorldPay’s board.
WorldPay processed 6.8bn transac-
tions last year worth £243bn through
brands including Streamline, which
the firm says underpins half of all UK
high street card payments.
RBS finalises WorldPay sale
BY MARION DAKERS
M&A

UK superfast
broadband
take-up lags
BY STEVE DINNEEN
TELECOMS

News
19 CITYA.M. 2 DECEMBER 2010
RBS hired UBS to run the WorldPay
auction earlier this year and the bank
has advised throughout the disposal.
The contract was another win for
UBS which has cashed in on the
bounce-back in the M&A market, fin-
ishing in the top ten global advisers in
the first half of this year. It was the
top adviser in Asia Pacific, with the
highest revenues in that region.
Head of EMEA investment banking
Simon Warshaw and managing direc-
tor Patrick Porritt were part of the
team advising UBS.
Warshaw has spent 24 years at
UBS, and helped found the bank’s
media sector group in the 1990s. He
made it onto the Guardian’s Media
100 list last year for his role in Lord
Carter’s Digital Britain report.
Warshaw also advised RBS on its
disposal of 318 high street branches
to Santander earlier this year.
UBS is currently advising BSkyB,
along with Morgan Stanley, in its bid
to get the best price from Rupert
Murdoch’s News Corp. It also worked
with Telefonica on its €7.5bn (£6.3bn)
bid for a stake in Vivo, which fell
through in July. Advent International
and Bain Capital were advised by
Credit Suisse, Weil Gotshal & Manges,
Kirkland & Ellis, PwC, FT Advisors Ltd,
First Annapolis and McKinsey &
Company.
SIMON WARSHAW
UBS
42
38
46
50
52
14Oct 12Nov 15Sep
ANALYSIS l RBS
p
39.88
01 Dec
Source: iDate
Cable
Superfast broadband
Fiber to the home
UK
0.2% 0.4% 0.3%
5.2%
12.0%
1.1%
2.0%
1.4%
7.1%
34.4%
FRA GER ITA USA JPN AUS SPA NED SWE
ANALYSIS l Broadband
HOLIDAY operator Thomas Cook yes-
terday said it would slash costs by up
to £50m after a “demanding” year
that saw profits come in at the lower
end of expectations.
Profit before tax fell six per cent
compared to 2009 to £277m, while
revenues were down four per cent to
£8.89bn. The UK and US markets were
particularly tough, with UK underly-
ing profit falling by a third on the pre-
vious year. This was due to
“significant foreign exchange head-
winds” from sterling’s weakness
against the dollar and euro, as well as
lower demand for holidays. The five-
day closure of EU airspace in April due
to volcanic ash also cost it about
£100m in revenues, the company said.
Thomas Cook is now reducing its
UK cost base and aims to generate
£40m to £50m in cost savings.
It expects the changes to cost £20m
to implement, incurred in the 2010-11
financial year, but believes they will
mitigate any further deterioration in
the market.
It has already cut 500 managerial
and support jobs since October.
“We recognised at the outset that
2009 to 10 would be demanding,” said
chief executive Manny Fontenla-
Novoa. “While we made good
progress in many of our operating
segments and delivered a strong
improvement in operating cash flow,
trading in the UK was even tougher
than anticipated.”
The results meant an overall loss
per share of 0.3p, down from 2009 eps
of 0.8p per share. The company will
pay a final dividend of 10.75p,
unchanged from 2009’s level.
Analysts remained upbeat about
the fundamentals and said the results
were as expected, though Wyn Ellis of
Numis warned of a tough year ahead.
“We find it difficult to identify a near
term catalyst; while shares look cheap
they may continue to drift,” he said.
INVESTMENT banker and broker
Numis has strengthened its position,
reporting improved profits as well as
growing its client portfolio, it report-
ed in its full-year results yesterday.
Operating revenues rose nine per
cent to £51.9m, from £47.5m the pre-
vious year, and profit before tax grew
87 per cent to £7.9m from £4.2m,
excluding one-off charges relating to
its employee share scheme.
Numis has focused on strengthen-
ing the business by recruiting new
teams, adding new capabilities and,
crucially, growing its client base. It
brought 29 new clients on board this
year, taking the total to 133 and its
stable of FTSE 250 clients to 26, chief
executive Oliver Hemsley said.
The firm has also conducted major
flotations such as Betfair, Ocado and
Better Capital, he said. It assisted
clients in raising £1.3bn in equity
funds in the past year, 67 per cent
more than the previous year.
“We have managed to attract a lot of
very good quality clients,” Hemsley said.
Numis has strengthened its bal-
ance sheet, reporting net assets of
£106.7m with £58.2m cash and collat-
eral, and it lowered costs by seven per
cent on the previous year.
Hemsley said he anticipates more
M&A activity in 2011 and growing
demand for non-bank lending from
companies. “Banks will be curtailed
in their ability to lend to corporate
clients, so we think there will be sig-
nificant opportunities,” he said.
Numis full-year profits up 87 per cent
as it adds new clients and capabilities
SOFTWARE testing firm Anite yester-
day announced its first half pre tax
profits soared 160 per cent to £6.5m.
Its revenue jumped 20 per cent to
£42.3m. It also hiked its interim divi-
dend five per cent to 0.315p per share.
It was buoyed by a market-led
recovery in both its handsets and net-
works divisions but saw its travel arm
profits dip.
Chief executive Christopher
Humphrey said: “Anite performed
well in the first half of this financial
year compared to a weak first half last
year.
“Strong recovery in both handsets
and networks produced a result sub-
stantially ahead of last year with
group revenues and profits exceeding
the Board’s prior expectations.
“We believe that Anite is better
positioned to take advantage of the
new 4G market than for previous
technologies, and that the 4G cycle is
also likely to be deep and long last-
ing.”
Anite buoyed by strong
mobile market recovery
TECHNOLOGY

MEDIA group Aegis yesterday expand-
ed its presence in Russia by snapping
up a majority stake in the country’s
biggest independent market research
business.
Aegis acquired Comcon through
Synovate, its market research group,
for an undisclosed amount.
According to the terms of the deal, it
could acquire the remainder of the
business in 2015.
Comcon, which has offices in
Moscow and St Petersburg, produced
$18.9m (£12.1m) of sales in 2009 and
has 200 employees.
Aegis chief executive Jerry
Buhlmann said the acquisition would
give it the scale to expand further in
the relatively immature Russian mar-
ket research sector.
Meanwhile, Aegis Media has
appointed Simon Francis as its new
chief executive for the Europe,
Middle East & Africa (EMEA) region.
Francis, who was poached from
rival Saatchi & Saatchi, will report
directly to Buhlmann.
Buhlmann said: “Simon has a
wealth of experience both in the sec-
tor and the region with an impressive
track record which speaks for itself.”
Francis said he was “delighted” to
be joining Aegis, which he said had
“an amazing track record of innova-
tion.”
Aegis snaps up Russian rival
BY HARRY BANKS
MEDIA

Thomas Cook
profits dip in
tough market
BY ALISON LOCK
AVIATION

BY ALISON LOCK
FINANCIAL SERVICES

News
20 CITYA.M. 2 DECEMBER 2010
185
175
195
200
14Oct 12Nov 15Sep
ANALYSIS l Thomas Cook
p 178.00
01 Dec
125
115
135
140
14Oct 12Nov 15Sep
ANALYSIS l Aegis
p
136.30
01 Dec
EUROPEAN planemaker Airbus plans
to upgrade its best-selling A320 medi-
um-haul jets from 2016 with new
engines offering 15 per cent fuel sav-
ings, as it fends off upstart competi-
tors.
Airbus said yesterday that it would
invest just over €1bn (£840m) in the
“A320neo” project to improve effi-
ciency and cut harmful emissions
and noise.
Until now, Airbus and US rival
Boeing, with its 737, had resisted
changing winning designs that are
the backbone of the global airline
business and helped give birth to the
low-cost sector.
The new planes, with upward-
slanting wingtips, will look almost
identical to existing aircraft but have
larger and more efficient engines
from either US group Pratt &
Whitney or CFM International, a
joint venture between US conglomer-
ate General Electric and French
group Safran.
The long-awaited decision hit back
at Canadian group Bombardier,
China and Russia, who all aim to
challenge Airbus and Boeing for a
segment of the global jetliner mar-
ket, worth $1.7 trillion (£1.09 trillion)
over 20 years. It was also a critical
move in a war between enginemak-
ers for dominance as the aviation
industry climbs out of recession.
The new engines will be offered as
an option on A320 and derivative
A319 and A321 models.
Airbus plans
€1bn upgrade
of key aircraft
AVIATION

ANALYST VIEWS: WHAT DO YOU MAKE OF
THOMAS COOK’S RESULTS? Interviews by Alison Lock

KEVIN BOWMAN | HARGREAVES LANSDOWN
Despite a year that investors and management will want to forget,
Thomas Cook continues to receive the benefit of the doubt. Costs in more mature
markets continue to be targeted, while sales expansion in emerging markets pro-
vide future growth prospects, and winter bookings offer further cheer.


NICK BATRAM | PEEL HUNT
Trading conditions are challenging but overall we think the update is reassur-
ing. Good underlying progress has been overshadowed by the tough consumer back-
drop. While market conditions stay difficult we feel the group is close to trough
earnings; a price to earnings ratio of under eight times hardly looks demanding.


SAM HART | CHARLES STANLEY
These results were in line with soft expectations, impacted by disrup-
tion relating to the volcanic ash cloud and weak underlying trading in the UK busi-
ness. The shares look cheap but the quality of earnings in the tour operator
sub-sector is poor. We expect investors to remain wary of the shares.

Thomas Cook chief
executive Manny
Fontenla-Novoa
said 2009 to 10
would be “demand-
ing”.
Picture: REX
THE BBC yesterday announced it will
launch a global commercial version
of its iPlayer TV-on-demand platform
through a subscription service on the
iPad.
A BBC spokesman told City A.M. the
iPad app will launch in the second
quarter of 2011. It is expected to be fol-
lowed by a full online roll out which
will offer some free content supple-
mented by advertising.
in the second quarter next year.
Meanwhile, Virgin Media yesterday
announced details of its new TiVo-
powered internet TV service.
The roll out will begin later this
month. The package will cost £199
plus a monthly subscription fee.
TiVo, which has been available in
the US for several years, includes a
recommendation feature which will
predict shows a user may enjoy based
on their viewing habits and personal
ratings.
BBC to launch commercial
version of iPlayer on iPad
BY STEVE DINNEEN
TECHNOLOGY

Wall Street surges
as euro panic eases
T
HE Dow and the Standard &
Poor’s (S&P) 500 posted their
biggest gains in three months
yesterday as efforts to resolve
the European Union’s debt crisis
helped push the S&P above 1,200, an
important technical level that signals
the potential for the rally to continue.
The S&P 500 moved out of its
recent trading range as some of the
panic of previous days eased.
Investors focused on valuations that
many analysts say are cheap, but vol-
ume was average in a sign fund man-
agers were not fully participating.
Economically sensitive cyclicals led
a broad rally. Aluminum producer
Alcoa Inc rose 3.4 per cent to $13.57,
while Home Depot Inc, whose for-
tunes are tied to the US consumer,
jumped 4.6 per cent to $31.61.
Stocks rallied as speculation grew
that the European Central Bank
could step up its purchases of govern-
ment debt and a US official said
Washington would support boosting
an EU rescue facility via IMF funds.
"It seems that as bad as Europe's
issues are, there is a growing sense
this is not a systemic problem that is
going to bring the whole system
down," said Jack Ablin, chief invest-
ment officer at Harris Private Bank in
Chicago. "Beyond their troubles, we're
seeing strong results in other parts of
the world."
The global economic recovery
remained sound. US private-sector
payrolls achieved their biggest gain in
three years, according to ADP data,
while global manufacturing picked
up speed, boosted by China and
Germany.
The US-traded-stock of Banco
Santander, the Spanish bank in the
eye of the euro storm, jumped 7.9 per
cent to $10.38. US investors have sold
the stock relentlessly in recent weeks,
turning it into a proxy for Eurozone
risk aversion.
The Dow Jones industrial average
gained 249.76 points, or 2.27 per cent,
to 11,255.78. The S&P 500 rose 25.52
points, or 2.16 per cent, to 1,206.07.
The Nasdaq Composite Index added
51.20 points, or 2.05 per cent, to
2,549.43.
Volume was moderate, with 8.29bn
shares traded on the New York Stock
Exchange, the American Stock
Exchange, and the Nasdaq, compared
with an average of 8.48bn so far this
year.
B
RITAIN’S leading share index
staged its biggest one day really
in three months yesterday, claw-
ing back some of the losses
made in the past three sessions, with
commodities boosted by upbeat
Chinese data and banks rallying after
being hit by sovereign debt concern.
The rally was also boosted by hopes
the European Central Bank (ECB)
could step up its purchase of euro-
zone government bonds in a bid to
support the borrowing needs of strug-
gling states.
The FTSE 100 index gained 114.23
points, or 2.1 per cent, to 5,642.50,
having ended November back at levels
not seen since mid-September.
“There has been good news consis-
tently across the globe, starting with
the Chinese PMIs. UK manufacturing
data was also much better than
expected and the U.S. figures were
good,” Mike Lenhoff, chief strategist at
Brewin Dolphin, said.
China’s official purchasing man-
agers’ index (PMI) climbed to a seven-
month high in November, while
British manufacturing activity last
month unexpectedly rose to a 16-year
high.
In the US, manufacturing grew for
a 16th month and the private sector
posted its largest jobs gain in three
years.
Commodity stocks were big movers
on the index, tracking firmer metal
and crude CLc1 prices after the
Chinese data suggested demand was
robust.
Miners Kazakhmys, Antofagasta
and BHP Billiton gained 3.4 to 5.3 per
cent, while Xstrata jumped 5.8 per
cent, also buoyed by a bullish note
from Barclays Capital.
Oil stocks BG Group, BP and Royal
Dutch Shell rose 0.9 to 2.7 per cent.
Banks were also in demand and fea-
tured among the top performers after
being sold off in previous sessions on
worries about the euro zone debt cri-
sis.
British banks Royal Bank of
Scotland, Barclays and Lloyds Banking
Group rose 4.6 to 6.1 per cent.
Insurer Prudential gained 5.5 per
cent after it announced plans to dou-
ble new business profits in Asia by
2013.
Among individual risers, Sage
Group was 5.3 per cent higher after
the British accountancy software
company's results beat full-year expec-
tations.
Though the market moved higher,
some traders were cautious.
“It certainly looks like there has
been a base put under the market.
Ultimately I think the stage has been
set for the market to move higher,
although uncertainty will keep
something of a lid on it,” said Yusef
Heusen, senior sales trader at IG
Index.
BAE Systems slipped 1 per cent,
knocked by a bearish sector note by
Goldman Sachs, with the broker reit-
erating its “conviction sell” on the
company. Ex-dividend factors
accounted for the two heaviest FTSE
100 fallers, Severn Trent and
National Grid, while Land Securities
and Johnson Matthey lost their pay-
out attractions yesterday.
Commodities and banks help
FTSE snap its losing streak
THELONDON
REPORT
THENEW YORK
REPORT
5,300
ANALYSIS l FTSE
5,700
5,900
5,500
5,100
6Sep 24Sep 14Oct 3Nov 23Nov
5,642.50
01 Dec
21
Markets&Investment
LONDON’S TOP 250
3i Group 307 8.75 326 250
3i Infrastructure 117.5 0.25 118.5 97
A.B. Foods 1078 17 1107 797
Aberdeen Asset.Man. 185 6 190 112.75
Admiral Group 1561 33 1693 1070
Aegis Group 136.25 4.25 136.25 103.5
Afren 128 2.75 134 79
African Barrick Gold 539.5 19.5 670 503
Aggreko 1523 58 1685 768
Alliance Trust 357 8 361.25 293.5
Amec 1129 48 1154 733.5
Amlin 388 12.5 433 357.25
Anglo American 2898.5 78 3055 2254
Antofagasta 1361 46 1472 761
Aquarius Platinum 330 5.5 458 227
ARMHoldings 401.5 5.75 414.5 160.25
Ashmore Group 348 7.75 383.75 218
Ashtead Group 131.5 0.5 135 66.25
AstraZeneca 3035 39.5 3385 2732
Atkins (WS) 722 22 792.5 556.5
Autonomy 1359 26 1975 1271
Aveva Group 1533 33 1575 942.5
Aviva 369.25 14.5 423.5 294.25
Babcock International 527 6.5 635 492.75
BAE Systems 327 -3.25 388.75 294.75
Balfour Beatty 277 3.25 303 229.75
Barclays 268 11.75 383.25 255.25
Barratt Development 70.75 0.75 142 70
BBA Aviation 194.5 4.25 217.25 152
Berkeley Grp Hldgs 824 16.5 892.5 742
BG Group 1191 29.5 1296 984
BHP Billiton 2363 78 2469 1684.5
BlackRock Mining 740.5 29 740.5 492
BlueBay 483 0 489.25 258
BlueCrest AllBlue 173.75 0.25 174.5 152
Booker Group 55.25 0 56 38.75
BP 429.75 4 655.5 303
Brit Insurance 1036 4 1045 720
British Airways 263.25 7.75 286 184.25
British Amer.Tob 2348 17.5 2464.5 1905.5
British Empire Tst 482.25 7.25 495 394
British Land 491.5 10.5 520 418.25
Britvic 490.5 1.5 518 373
Brown (N.) Group 283 5.25 301 206.5
BSkyB 721 0.5 729 524.5
BT Group 169.5 -0.5 174.25 110
Bunzl 715.5 14 777 616.5
Burberry Group 1032 36 1050 564
C&WComms 44.25 -0.25 63.75 44.25
C&WWorlwide 63.25 1.5 100 60.5
Cairn Energy 395 8.5 493.25 303.5
Caledonia Inv. 1810 30 1827 1511
Capita Group 645.5 -6.5 826 645.5
Capital & Counties 147 2 157 100
Capital Shop Centre 400.5 9 401.5 301
Carillion 337.25 5 357 273
Carnival 2674 52 2920 2037
Catlin Group 345.5 14 393 313
Centamin Egypt 181.25 2 197 106.75
Centrica 313 5.75 346 257
Charter 707.5 23 848.5 567
Chemring Group 2896 31 3663 2598
Close Brothers 798.5 5.5 821.5 664
Cobham 192.5 0 276 192.25
Colt Telecom 124.75 3 142.5 109
Compass Group 568.5 13 568.5 425
Cookson Group 560.5 22 607 367.5
Croda International 1522 68 1522 749.5
Daily Mail & Gen 529.5 10.5 567.5 404
Davis Service 398 6.75 435 360.25
De La Rue 637 59 1005 549.5
Debenhams 71.5 1 84.25 53
Derwent London 1457 25 1605 1208
Dexion Abs 140.25 -0.75 148 131.25
Diageo 1146 2 1193 1000
Dixons Retail 25.5 0.25 38 23.75
Domino’s Pizza 542 16 542 280.75
Drax Group 358 4.5 444 326.25
DS Smith 192.5 6.25 192.5 104
Dunelm 503 0 510 325.25
easyJet 434.25 6.25 496.5 341.5
Edin.Inv.Tst. 435.25 7 464.25 351.5
Electrocomponents 268 6 269.5 161.75
Enquest 141.5 3 141.5 89.25
Essar Energy 538.5 16.5 548 383
Eurasian Nat Res 903.5 25 1266 818
Euromoney Inst. 704 9 708 405
Experian Group 751.5 17 751.5 572
Ferrexpo 358 9.25 396 179.5
FirstGroup 371 9.25 426 336
For.&Col.Inv.Tst 295.25 4.5 299.75 251.5
Fresnillo 1459 48 1469 669.5
G4S 239 1.25 283.5 237.75
Genesis E.m.f. 527 8 540.5 399
GKN 195.5 7.5 195.5 102
GlaxoSmithKline 1231 19 1339.5 1095
Great Portland Est. 336 6 364 268
Greene King 449.75 -1.25 468.25 376.25
Halfords Group 409.25 0.25 550 372.75
Halma 331.75 18.25 343 223
Hammerson 403 10 434.5 336.25
Hargreaves Lansdown 497 4 501.5 265.25
Hays 108.5 0.25 123.5 88.5
Henderson Group 121 2 151.75 112.75
Heritage Oil 376 5 581 296.75
Hikma 776 13 804.5 497.5
Hiscox 354.25 7.25 370 300
Hochschild Mining 567 41 580.5 234
Home Retail Group 202 0.25 310.75 201.5
Homeserve 439.25 8.75 487.5 322.5
HSBC Holdings 656.25 8 740.5 596.25
Hunting 627.5 35 658.5 439.5
ICAP 499.5 24.5 499.5 294
IG Group 512.5 21.5 553 335.5
Imagination Tech 370 11 441.75 211
IMI 884 27.5 884 504.5
Imperial Tobacco 1881 -5 2154 1753
Inchcape 335.5 11 357 237
Informa 410.75 15.5 448 285
Inmarsat 650 2 821 606.5
InterContinental Htl 1155 15 1225 855
Intermediate Cap.Grp 307 -5.75 351 240.5
International Pers Fin 304.75 5.75 332 183.25
International Power 413 5.5 436.75 281.25
Intertek Group 1893 79 1959 1150
Invensys 324 3 349 230.25
Investec 506.5 10 562 413.25
ITV 67.75 1.25 72 48.25
Jardine Lloyd 590 7 600 435.75
John Wood Group 497.5 30.5 497.5 285
Johnson Matthey 1832 48 1973 1446
JPMFlem.Emerg Mkt. 609.5 12 618 450.5
Jupiter Fund Man 300 0 306 180.25
Kazakhmys 1460 74 1630 965
Kesa Electricals 168.75 4.5 170.75 99.25
Kingfisher 237.75 2.75 250 198.5
Ladbrokes 125.5 2 162.75 123.5
Lancashire 622 8 647 422.25
Land Securities 638.5 9.5 696.5 545
Legal & General 94.5 3.25 106.25 69.75
Lloyds Banking Grp 64 3.75 77.5 46.5
Logica 118.25 1.5 148 101.75
London Stock Ex. 767 8.5 795.5 544
Lonmin 1750 57 2157 1355
Man Group 272.5 7.75 328.5 202
Marks & Spencer 384.75 12 427.5 323.5
Meggitt 337.5 13 337.5 239.25
Melrose 290.25 -3 304.25 162
Mercantile Inv Tst 1013 29.5 1028 822.5
Michael Page 483 6.5 503.5 345.25
Micro Focus 359.5 28 546.5 276
Millennium& Cop. 536.5 7 570 342
Misys 295.5 3.25 298.25 200.5
Mitchells & Butlers 349 7 356 247.5
Mitie Group 213.5 6.25 241 188.75
Mondi 478 9.25 557.5 321.5
Monks Inv.tst. 341.5 5.5 349.25 265.5
Morgan Crucible 239.5 0.5 254 145.5
Morrison (Wm) 272.5 0.5 306.25 257.5
Murray Int.Tst 907.5 15 936 720
National Express 227 4 259.5 165.5
National Grid 552.5 -15.5 613.25 484.25
Next 2016 6 2344 1817
Northumbrian Water 327.5 -2.5 361.5 252.75
Ocado Group 154.25 6 167 123.5
Old Mutual 121.5 3 145.25 97.25
PartyGaming 252 17.5 334.5 206
Pearson 960.5 34.5 1051 846
Pennon Group 624.5 -3.5 639 483
Persimmon 345.25 6.75 507.5 336.5
Petrofac 1450 59 1540 876.5
Petropavlovsk 1088 23 1365 852
Phoenix Group Hldgs 621 -9 758 557.5
Premier Farnell 292 7 296.75 158.5
Premier Oil 1880 44 1890 1017
Provident Financial 802 -9.5 974 728.5
Prudential 599 31 653 487.5
PZ Cussons 383 0.5 403 234.75
QinetiQ Group 115 0.25 167 96.75
Randgold Res 6035 40 6655 4209
RDS ‘A’ 1989 53 2100.5 1624
RDS ‘B’ 1969 61 2064.5 1554
Reckitt Benckiser 3408 8 3655 3037
Reed Elsevier 515.5 6.5 563 460.5
Regus 76 -0.25 120 66
Renishaw 1158 33 1235 516.5
Rentokil Initial 88.25 0.5 138.5 87.75
Resolution 215 3.5 349 211.25
Rexam 305 3.5 346.75 272.5
Rightmove 760 10 810 464
Rio Tinto 4207 127.5 4454 2812
RIT Capital Partners 1175 15 1210 944.5
Rolls-Royce Group 618.5 9.5 654.5 473.5
Rotork 1608 29 1895 1145
Royal Bank of Scot 40 2.25 58 28.5
RSA Insurance Grp 124 3.75 136.5 114.75
SABMiller 2083 49 2157 1650
Sage Group 271 13.75 285 220
Sainsbury (J) 355.75 0 395 313
Schroders 1658 62 1676 1116
Schroders NV 1316 45 1325 929.5
Scot.& Sth. Energy 1112 -8 1198 1010
Scottish Mortgage 667 10 683 475
SEGRO 281.25 8 352 250.25
Serco Group 557 14.5 651 494.25
Severn Trent 1410 -36 1468 1010
Shaftesbury 444.5 9.5 460 349.25
Shire 1497 -6 1567 1159
SIG 113.5 2.5 137.75 90.75
Smith & Nephew 593.5 11 696.5 537.5
Smiths Group 1162 24 1285 954
Soco International 342.75 9.25 484.25 292
Spectris 1165 24 1222 691.5
Spirax-Sarco 1846 48 1870 1094
Spirent 152.5 7.5 156 92
Sports Direct 127 -1.25 152.75 92.25
St James’s Place 240.5 4.5 292 204.25
Stagecoach Group 200 2.75 224 150
Standard Chartered 1799 68 1950 1351.75
Standard Life 203.25 2 236 173
Supergroup 1638 68 1638 535
TalkTalk 156 3.5 156 108.5
Talvivaara Mining 518 27.25 581 342.5
Tate & Lyle 520 10 531.5 388.75
Taylor Wimpey 24.25 0.25 44 22.25
Telecity Group 474 5.5 532.5 335
Templeton Emrg. 653 18 685 471.5
Tesco 414.25 0 454.5 377.5
Thomas Cook Group 178 -8.25 272 171.75
Travis Perkins 819 11 912 664.5
TUI Travel 214.5 3.5 308.5 190
Tullett Prebon 354 3.75 417.25 262
TullowOil 1144 -3 1369 991.5
UK Commercial Prop 77 2.25 85 72.75
Ultra Electronics 1653 33 1895 1265
Unilever 1806 29 2015 1688
United Utilities 589.5 -7 628.5 488.25
Utd Business Media 634.5 18.5 682.5 409.75
Vedanta 2045 59 2934 1839
Victrex 1239 43 1338 788
Vodafone Group 164.5 3.75 175 129.5
Weir Group 1797 57 1797 669
WellstreamHoldings 742 9 789 436
WH Smith 480.5 8 537.5 398.25
Whitbread 1724 35 1797 1266
WilliamHill 160 4.5 216.5 155.5
Witan Inv Trust 483.75 11.75 490.5 410
WOLSELEY 1740 24 1817 1166
WPP Group 728.5 17 755 572.5
Xstrata 1367 75 1419 845.75
Company Name Closing Price Price Change 52wk high 52wk low
(p) (p) (p) (p)
Company Name Closing Price Price Change 52wk high 52wk low
(p) (p) (p) (p)
Company Name Closing Price Price Change 52wk high 52wk low
(p) (p) (p) (p)Company
Name Closing Price Price Change 52wk high 52wk low
(p) (p) (p) (p)
LONDON TOP 250 BY MARKET CAPITALISATION
POWERED BY
www.digitallook.com
Growth Investors:
Young investors will probably want riskier,
more growth oriented assets, because they
can afford to endure wealth losses and ride
out the peaks and troughs of the market. A
typical growth portfolio might include:
l 70 per cent equities, including some
emerging market or new technology funds.
l 20 per cent fixed income assets such as
corporate or government bonds.
l 10 per cent alternative assets such as
commodities or currencies.
Balanced Investors:
As investors grow up, they will probably
want to reduce their risk exposure. A more
balanced ETF portfolio could be made up of:
l 50 per cent equities, divided between
riskier growth equities and blue chip firms.
l 45 per cent fixed income assets.
l Five per cent commodities such as gold.
Conservative Investors:
Someone approaching retirement is probably
going to be more concerned by volatility than
growth, and so will want assets that provide
a relatively stable income without risking
capital. Such a portfolio might include:
l 70 per cent fixed income assets.
l 25 per cent high dividend, stable equities
such as blue chips.
l 5 per cent alternatives.
BUILDING YOUR PORTFOLIO | THE BALANCING POINT
M
OST agriculture prices have seen dou-
ble-digit gains this year, reflecting a
trend towards higher and more volatile
prices since 2003. For agribusiness,
this could lead to stronger returns for agricul-
ture producers and support companies, irre-
spective of near-term gyrations in the business
cycle, if suppliers strive to boost productivity.
Rising prices have significantly boosted farm
income, with the US Department of
Agriculture (USDA) projecting 2010 net farm
income to rise 24 per cent in 2010 to $77bn,
the fourth largest on record. Farm balance
sheets are strong and low gearing is leaving
farmers with ample borrowing capacity. The
strength of the US farm sector is reflected in
booming activity in the agricultural mid-West,
with unemployment in states like North
Dakota almost one-third that of national rates.
Farmers in the US, the world’s largest cereal
producer, are expected to respond to higher
prices by boosting production. If similar pat-
terns from 2009-10 are repeated, this could
potentially translate into higher cotton and
corn plantings – crops that tend to be relative-
ly input intensive. For example, the nitrogen
application rate for corn is estimated to be
over five times that of soybeans according to
the USDA. On the back of these developments,
markets have begun to increase agribusiness
valuations, reflecting higher expected earnings
via both demand volumes and prices. The fer-
tiliser industry is a prominent example since
BNP Billiton’s bid for Potash was recently at
the centre of M&A speculation.
Looking ahead, emerging market imports
will be a key barometer to watch, with China
recently becoming a large net importer of sev-
eral agricultural products, mirroring trends in
other basic resources. Food inflation has his-
torically had a weak relationship to the busi-
ness cycle, suggesting that recent Chinese
tightening could have a more modest impact.
Emerging markets will be the chief source of
food demand growth in the future and already
account for over half of the world’s cereal pro-
duction. Emerging markets face shortages in
infrastructure, training and technologies to
boost food production adequately: improving
productivity via agribusiness investment will
be critical to avoiding global food shortages in
the medium term.
FOOD PRICES
PUT FOCUS ON
AGRIBUSINESS
DANIEL WILLS
SENIOR ANALYST, ETF SECURITIES
O
NE traditional rule of investing is
quite simple. Take your age, subtract
it from 100 and invest that percent-
age of your portfolio in equities and
the rest in bonds. When you are young,
you have more of your money in stocks,
which traditionally perform better over
time. As you get older, you move more into
bonds, thereby escaping volatility and so
insuring yourself against risk when you
actually need the money.
Even after decades of financial innova-
tion, that rule still near enough sticks –
the most important thing is to understand
your personal circumstances and go from
there. But there are some things that
investors should know about, especially
when investing with ETFs.
As Dan Draper, global head of ETFs at
Credit Suisse, explains, constructing a
portfolio is “a little like building a house”.
What makes a house’s design conservative
or architecturally outlandish isn’t so much
the building materials – though those are
of course important. Rather it is how they
are arranged. By diversifying, and so buy-
ing a mix of assets – bonds, shares and
even commodities and more liquid assets
like currencies – investors are spread their
risk between uncorrelated, or inversely
correlated assets. So if one part of the port-
folio loses value, then another part may
strengthen.
IDEAL BUILDING BLOCKS
According to Draper, ETFs help investors
achieve that. “They’re pretty ideal building
blocks”, he says. “The great thing about
ETFs is that even if you’re just investing
your ISA allowance, you can get 6 to 8
funds into that £10,200, so it’s really easy
to diversify”.
How you diversify is, of course, also cru-
cial. Unsurprisingly, most older people will
want to consider holding more fixed
income investments, though with interest
rates as low as they currently are, high div-
idend yield, blue chip equities are also
worth considering. Most younger people,
conversely, might want to consider more
exciting emerging market products so as
to cash in on long run growth.
Commodities like gold are worth holding
in small amounts – about 5 per cent is typ-
ical, according to Draper – as a hedge
against financial uncertainty, but it is
important not to buy heavily into fads.
The important thing is that investors
know what their aims are and structure
their portfolios accordingly. David
Swenson, the chief finance officer at Yale
University, achieved returns of 11.8 per
cent per year from 1999 to 2009, riding
out the recession, by doing just that – his
model of investment stressed the impor-
tance of choosing several exciting but
uncorrelated investments. Investors
would do well to follow that advice.
ONCE BALANCED, STAY BALANCED
It is also essential to make sure that your
investments remain balanced. If the con-
Spreading risk
is crucial if you
want to build a
stable portfolio
Investors need to remember why they are
investing, be diligent and hedge risk when
using ETFs as a tool, writes Daniel Knowles
Constructing an ETF
portfolio is like put-
ting up a house
Picture: GETTY
Agribusiness is a fertile investment Picture: ALAMY
Source: Monevator.com
ANALYSIS l David Swenson's Ivy League Portfolio
15% FTSE 100
15% FTSE 250
5% MSCI Emerging Market Equity
15% FTSE Developed World ex-UK
20% FTSE EPRA/NAREIT UK Property
15% FTSE UK All Stocks Gilt
15% £ Index-Linked Gilts
Investment | Listed Products
22 CITYA.M. 2 DECEMBER 2010
DB X-TRACKERS LISTS MORE ETFS IN SPAIN
Deutsche Bank’s exchange-traded funds
(ETF) arm db x-trackers yesterday launched
its second set of ETFs on the Spanish stock
market. Db x-trackers yesterday announced
10 more ETFs listed on the Bolsa de Madrid,
which provide exposure to developed and
emerging market equities, to two short
indices, and also to a private equity index.
The launch follows db x-trackers’ debut on
the Spanish stock market on 25 November,
making it now the second biggest provider
in Spain in terms of numbers of products
listed.
BARCLAYS UNVEILS ETF-LINKED PRODUCT
Barclays Wealth this week issued its 13th
Emerging Markets Optimiser (CMO) struc-
tured product which is linked to the iShares
MSCI Emerging Market Index fund. This is an
ETF providing exposure to 21 emerging mar-
kets with heavy weighting towards the
BRICs. The EMO smoothes returns by adjust-
ing its exposure to the index fund on a daily
basis. This six-year investment offers full
repayment of capital at maturity and
investors receive 72.5 per cent of the invest-
ment return produced from this strategy. The
minimum investment is £5,100.
INSURERS LEAD SECTOR NET OUTFLOWS
According to BlackRock data, in the week to
26 November STOXX Europe 600 sector
ETFs saw $65.6m of net outflows, trimming
the year-to-date net inflows to $476.7m. The
sectors which saw the largest ETF net out-
flows last week were in insurance ($123.7m)
and utilities ($31.7m). In contrast, basic
resources ETFs experienced net inflows of
$109m. Year-to-date, bank sector ETFs have
seen the largest net inflows with $222.2m,
followed by basic resources with $85.8m.
The food and beverage sector has had the
largest net outflows of $162.6m.
LISTED PRODUCT NEWS
BY JESSICA MEAD
New products on the Spanish stock exchange Picture: REUTERS
stituent parts of a portfolio all do very
differently, then a fund can get out of
line very quickly. Imagine, for example,
a fund half in equities and half in bonds.
If equity prices increase by 50 per cent,
and bond prices halve, the portfolio is
now balanced 3:1 in favour of equities.
By rebalancing every year, or even
more frequently if you have invested in
particularly volatile investments, you
effectively take profits in investments
that have done well and shore up those
that have done badly but might still
recover. Over time, that helps you ride
out volatility and also, at least according
to some, increase your performance.
Thanks to their relatively low transac-
tion costs, ETFs make that quite easy to
do – meaning that even small investors
can build and maintain a well balanced
portfolio with an appropriate level of
risk.
Investors should also remember to
consider all of their assets, including
very illiquid ones like houses and life
insurance, when building a portfolio.
ETFs are best considered as a way to plug
holes in a broader life investment plan.
Thanks to their liquidity and the range
of markets they offer access to, they can
be very useful.
Effectively planning for retirement is
more than just selling stocks and buy-
ing bonds. But with financial markets
exceptionally volatile at the moment,
having a well balanced and properly
managed portfolio is vital.
F
EWretail stocks have managed to see
their share price recover to the halcy-
on days of 2007, but Carphone
Warehouse has recently achieved that
feat with the stock now eyeing the 400p
level. Clearly the Christmas season has the
potential to bring further cheer for the
stock. Furthermore, given the ongoing tide
of innovation in mobile communication as
well as the company’s decision to start pay-
ing a dividend, this stock could remain a
popular choice for some time yet. The cur-
rent IG Index price is 388.5p-391p
With continuing speculation in the mar-
kets about the safety of European sover-
eign debt, gold could once again be viewed
by the markets as a safe haven. With the
precious metal making a steady charge
back up towards the $1,400 level, a breach
above here could well lead to an extended
move higher. WorldSpreads offers a spread
on the rolling spot price of $1,391.25-
$1,391.75.
The tide seems to be turning for travel
firm Thomas Cook, after its shares suf-
fered in late September from a profit warn-
ing. Yesterday it released its preliminary
2010 results statement, revealing a lower-
than-expected 6 per cent fall in adjusted
underlying operating profits. The deal with
Russia's VAO Intourist, concluded on 25
November, adds a new dimension to the
group and analysts says it fully exposes
Thomas Cook to immense emerging mar-
kets growth potential. Spreadex offers a
December spread of 176.5p-178.3p
Broadband satellite operator Avanti
Communications yesterday reported bet-
ter-than-expected results and already has a
strong balance sheet. The Aim-listed start-
up company already has one satellite in
orbit and a second in the pipeline. Analysts
at Galvan Research say that with the first
satellite successfully launched, the compa-
ny will be viewed by analyst and the mar-
kets alike as a maturing satellite
communications provider. “This alone will
prompt a near-term re-rating of the stock
and will in our view propel the share price
to new highs long before HYLAS 2 [the
second satellite] reaches the launchpad,”
Galvan says. Spreadex quotes a rolling
spread of 719.1p-730.4p.
Markets went a little crazy yesterday
afternoon after the news came through
that the US said that it was prepared to
make additional contributions to support
European bailouts. Stocks and commodities
rallied and the dollar got smashed. Yet in
spite of this shoot higher, sterling-dollar
still failed to take out the important
$1.5640 level for the second time in a day.
Traders should look to sell further rallies in
the $1.5620-$1.5640 area. Spread Co
offers a spread on sterling-dollar of
$1.5612-$1.5614.
Jessica Mead
THE
TIPSTER
CHRISTMAS CHEER FOR
CARPHONE WAREHOUSE
Carphone Warehouse
is on the way up
Picture: REUTERS
Investment | Listed Products
23 CITYA.M. 2 DECEMBER 2010
If you want to make yourself indispensable
then saving money is a pretty good start,
especially right now. By Jeremy Hazlehurst
Five ways to cut
costs, whatever
your business
Packaging can be
a waste of money
Picture: GETTY
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1. ASK “WHY?”
If you think that something is wasteful,
don’t accept that it is “just the way we do
it here”. Bad habits can become
engrained. In her book 100 Great Cost-
Cutting Ideas, Anne Hawkins tells the
story of a technology manufacturer which
had been including needless technical
information with all its products for 15
years, at massive cost. The best way to spot
these sorts of inefficiencies is to bring in
somebody from another part of the organ-
isation to look at processes. They are more
likely to ask the fundamental question:
“Why do we do this?”
2. ASK FOR CRITICISM
Make it a key part of people’s jobs to sug-
gest money-saving improvements. Many
people feel it isn’t their place to tell man-
agement that they are wasting money.
Some come from cultures where it is dis-
respectful to criticise. These are corrosive
ideas that you have to change. Reiterate to
staff that you are all in business together –
lower costs and higher profits mean more
money for everybody. Explain that man-
agers can’t make savings on their own,
but that they need the input of the people
on the ground, and communicate that
you are a team.
3. DITCH UNLOVED EXTRAS
It can be tempting to over-deliver on
things like pretty packaging, but if cus-
tomers aren’t using some parts of your
service, then get rid of them. “Don’t do
things that your customer doesn’t want
and therefore isn’t paying for,” says
Hawkins. Also, make sure there is a dia-
logue between those who talk to cus-
tomers and those who design products.
City Focus| Careers
24 CITYA.M. 2 DECEMBER 2010
The key here is to go and look at the way
the customers are using your product.
This is the best way to work out what
they do and don’t value.
4. MANAGE EXPECTATIONS
Not all your cost-cutting tactics will have
immediate effects, so make sure every-
body knows that some of your changes
will only see returns in the long-term.
People get upset if they see big changes
but few immediate bottom-line results,
says Hawkins. Some of the changes will
be “enablers”, which create opportuni-
ties. The cost-savings will only come
about if the opportunities are seized.
Make sure people understand that, and
talk about timescales and follow-on
actions from the start.
5. WATCH YOUR MAVERICKS
Every organisation has people who break
the rules and appear to get results, but
you need to check if these are results you
want. They might make deals from per-
sonal contacts, but does chasing the
invoices eat into your costs? Do they sell
“solutions” that you can’t deliver? And
brilliant new product ideas might be eye-
catching, but does the market want
them? Weight up the benefits mavericks
bring against the costs they incur.
H
OW did you feel when Santa
failed to come for the first time?
Of course, you know that Father
Christmas is a fiction; you are
even warned that he isn’t coming this
year. But the reality that he has gone for-
ever only really hits home when you
wake up on Christmas morning and
find there’s nothing at the end of your
bed.
Getting a lousy bonus can arouse sim-
ilar feelings. The good news is that while
we can’t bring the reindeer back down
the chimney, there’s plenty we can do to
get over an unexpectedly low bonus.
Here is a plan for how to cope with a dis-
appointing compensation round.
As a start, get the facts. Seventy-five
per cent of us think we’re above aver-
age (and 90 cent of us think we’re
above average drivers). Find out how
your performance actually compared
with your peer group. Maybe you were
fairly rewarded for what you delivered.
Sort your personal finances. Money
OCTAVIUS BLACK
A disappointing bonus
should be a call to action
worries swiftly infect every part of our
life. If you’d already spent assuming a
bigger windfall, act now to cut your out-
goings, say, with more modest
Christmas presents or a staycation in
Cornwall instead of a fancy fortnight in
the Bahamas. Learn from Ireland’s mis-
takes.
Check the environment. If the reason
for your low bonus is the performance
of the whole organisation or depart-
ment, then assess the chances that this
will be any different next year. If the
leadership has a credible plan to turn
things around, then stick with them. If
they’re relying on a change in the mar-
kets or other circumstances beyond
their control, it may be time to look else-
where.
Find out what will secure a bigger
bonus next year. Ask your manager for
objective measures that you will need to
deliver against and subjective advice on
how to manage your reputation along
the way. If their answers aren’t convinc-
ing, then seek out people who’ve done
well and uncover what they did.
Get going. The journey to a stellar
bonus next year has already started.
Focus on three things: the skills you
need to acquire to raise your underlying
contribution, the inputs that are most
likely to affect the outcome, and the way
you conduct yourself.
Is this year’s bonus a blip or a trend?
You decide.
Octavius Black is CEO, of The Mind Gym
www.themindgym.com
REMAIN OPEN TO OPPORTUNITIES.
Some of the best things that have
happened to me have come from
oblique angles. Opportunities come
out of nowhere and you have to be
prepared to open yourself up to them
and investigate.
EXPLORE POTENTIAL LEADS quickly
and ruthlessly and shut down any-
thing that doesn’t have potential.
Otherwise it’s a distraction. There are
lots of things that merit a quick look,
but if you are constantly searching
for new possibilities, you’ll never get
anything done.
WORK HARD. Most people are lazy.
Most don’t want to put in the last two
hours on a project, or won’t wake up
30 minutes earlier to do emails or
prepare for a meeting. I’m not a
workaholic, but my success has come
from a willingness to do the things
that many others won’t.
COMBINE DEEP SKILLS AND WIDE
KNOWLEDGE. They say that you have
to paint a thousand pictures before
you can produce your first master-
piece and it’s true; until you have
made 30 deals and watched them
progress for five years, then you don’t
know what can happen.
You have to work hard to develop
deep skills, but then marry them
with broad experience. English shoe-
makers are as skilled as you can get,
but they would have more success if
they learned about marketing and
branding. For example, I always keep
up to date with the technology indus-
try, because it is so fast-moving and
disruptive. You can’t be an expert in
everything, of course, but if you have
a wide-ranging curiosity you can add
new lessons to your core skills.
I HATE “ALMOST”. In business, and
certainly in the world of fashion and
luxury it’s the final 1 per cent that
makes all the difference. At Lodger
we made a classic wing-tip Chelsea
boot, and it took us a year to get it
right. The first one we did was good,
but the eighth was perfect.
In order to stand out in a competitive
marketplace you have to be 100 per
cent all the time. I hate things that
are almost right.
It infuriates me to see something that
is almost beautifully done, but
stopped short. Either do it right, or
don’t do it at all.
BOOK OF THE MONTH
The Wisdom of Bees
By Michael O’Malley
£9.99
Portfolio Penguin
DID you know that Sherlock
Holmes retired to keep bees?
Apparently he said that a hive
“provides as much incident as
can be found on the streets of
London.” And did you know
that bees are the only invertebrates
with symbolic language? Or that they
always keep their hives at exactly 39
degrees centigrade?
These are among the snippets of
information that keep you racing
through this little book by a social psy-
chologist, management consultant and
bee-keeper, which ingeniously uses the
lives of bees and the organisation of the
hive to teach 25 business lessons. I’m
tempted to call it a mini M-Bee-A.
So we learn that bees are long-ter-
mist, just like 3M or Procter & Gamble,
and that bees pace themselves and
always work for the success of the
whole hive – which teaches us that you
shouldn’t run your staff into the ground.
And that bees make sure they have
diversity in the hive, just like some cre-
ative companies do.
Bees know when to protect their
resources, and when to go out looking
for new sources of food – just like clever
businesses. Bees don’t rush workers out
into the field until they are ready;
if they do, then the colony will
die off. The parallel with a busi-
ness that trains people too quick-
ly is obvious. Also, hives are
meritocracies which jettison
underperformers.
Of course, the parallels are not
precise. Bees delegate very effec-
tively and the queen communi-
cates using an informational
cascade that, we are told, is the envy of
every CEO. As she does it via the secre-
tions of pheromones from her mandibu-
lar glands, however, it is not exactly
clear how the CEO can replicate this.
Obviously, not all bee behaviour is
translatable into a neat little business
lesson. When 18th century scientists
started studying bees they couldn’t
accept that the most important bee –
the queen – was a female. Then they
insisted that she was gentle, merciful
and chaste, the ideal female qualities of
the era. But she is none of these things –
she is wildly promiscuous and will sting
anybody who displeases her. What does
that say about business? And let’s not
even mention drones.
But none of that really matters. This
is a brilliant solution to the boringness of
business books, and the bee metaphors
make the lessons memorable. The most
fun business book I have read this year.
A bee-auty.
Jeremy Hazlehurst
KNOWLEDGE FOR TODAY’S BUSINESS ENVIRONMENT
The Certificate in Finance, Accounting and Business (CFAB) will
give you the key business skills to get ahead in your career. CFAB
will provide you with the practical knowledge and essential tools
in business, finance and accounting that can be used in any
industry or organisation.
Choose what works for you. Flexible study options and no
fixed exam dates allow you to fit CFAB around your existing
commitments.
Find out more about CFAB today.
ADVANCE YOUR CAREER
+44 (0)1908 248 250 icaew.com/cfabinthecity
City Focus | Careers
25 CITYA.M. 2 DECEMBER 2010
First develop a
skill, and then
add knowledge
NATHAN BROWN
FOUNDER OF LUXURY SHOE BRAND
LODGER
THESE THINGS I KNOW |
TIPS FOR GETTING ON IN THE CITY
English shoe-makers
are talented, but often
can’t sell themselves
Picture: GETTY
Lifestyle| Food and Drink
26 CITYA.M. 2 DECEMBER 2010
W
HILE turkey and Christmas pud-
ding are held back for the meal
on the big day, mince pies are
the real staple of the festive sea-
son. People who wouldn’t normally dream
of a mid-afternoon snack will suddenly
find themselves gobbling down piles of
pastry and fruity mincemeat, while every
cocktail party and seasonal bash is over-
flowing with them. But all mince pies are
not created equal – far from it. So we’ve
risked our waistlines to pick through some
of the best, and offer a little guidance for
those hosting Christmas parties, or just
sneaking in a cheeky pie before bed.
LAVERSTOKE PARK FARM, £10.50
hhiii
Large, crusty and uneven, Laverstoke’s
Luxurious mince pies look terrifically
enticing – until you find out that most of
the pie is pastry. As you’d expect from
these specialists in organic produce, the
mincemeat is pretty good – fruity, boozy,
not too sweet. But all we’re really left
with is the taste of flour from the pastry
overload – and they’re rather pricey too.
www.laverstokepark.co.uk
SELFRIDGES, £5.99
hhhii
These look a little too uniform for our
liking, though the softish pastry has a
fine buttery taste and melty texture.
Here’s the problem though: the pie actu-
ally sags in the middle due to a lack of
filling – we reckon barely a teaspoonful.
Shame, because it’s good, sweet mince-
meat, and the overall taste is superb – a
hit of fruit and spice with a hint of deca-
dence. If only the mincemeat portions
were that bit more decadent too.
www.selfridges.co.uk
WHOLE FOODS, £6.99
hhhhi
We tried two versions, with wholemeal
pastry and with white pastry – and both
were superb. The pies are topped off with
a pastry star that just about sits over the
huge scoops of mincemeat. And boy,
what mincemeat – chunky, wholesome,
firm, and free of the sickly sweetening
Timothy Barber sorts the great
from the good in our annual
hunt for the best festive pastries
that blights some other mince pies.
These felt authentic and tasted delicious,
the wholemeal pastry in particular
adding a gutsy twist.
www.wholefoodsmarket.com
FORTNUM & MASON, £9.50
hhhhi
Fortnum’s St Clement’s pies are delicious –
big, crumbly pies brushed with just the
right dusting of sugar, while a citrusy sur-
prise lurks inside, where an abundance of
orange and lemon peel adding aromatic
loveliness. Classy.
www.fortnumandmason.com
MARKS & SPENCER, £2.99
hhhhh
M&S has come up trumps with its top
tier Collection mince pies. The best thing
of all is the sheer boozy brilliance of the
mincemeat, while the glazed, rustic pas-
try is crispy and flavoursome. There’s
also a collection of 12 mini mince pies in
different styles (£4.99), in which the use
of pecan nuts as a topping for four of
them is sheer genius.
www.marksandspencer.com
WAITROSE, £1.29
hhiii
We expected Waitrose’s offerings to be a
cut above those from other supermar-
kets, but they weren’t. They’re a gener-
ous size and look nice, but all we could
really taste from the gloopy mincemeat
was sugar. Unexceptional in the
extreme.
www.waitrose.co.uk
DUCHY ORIGINALS FROM WAITROSE, £3.99
hhhhi
The pastry, though delicious, is very filling
– it’s more like shortbread than pastry.
There was a good amount of mincemeat
inside, and while it had plenty of fruit and
wasn’t too viscous like some of the others,
it was bland. A rather polite mince pie.
www.waitrose.co.uk
ABEL & COLE, £4.49
hhhhi
It’s always good to see a mince pie that rises
in the middle because it’s got so much
mincemeat packed into it, and the mince-
meat in A&C’s Luxury pies doesn’t disap-
point: it’s chunky, full of apple and raisins,
and substantial. These feel handmade and
artisanal, and are very satisfying.
www.abelandcole.co.uk
ROMEO & JULIET AT THE ROUNDHOUSE
After its highly acclaimed 2008 season,
the RSC is returning to Camden’s
Roundhouse with a ten-week season of eight
productions. Kicking things off is Romeo &
Juliet (right, 30 Nov-01 Jan), directed by the
prolific and brilliant Rupert Goold. Other pro-
ductions to come include The Winter’s Tale,
Julius Caesar, Antony and Cleopatra, Hamlet
and King Lear, each of which will be making
the most of the Roundhouse’s unique environ-
ment. Until 5 Feb, Roundhouse, Chalk Farm
Road, NW1 8EH. Tickets £10-£40 from
www.roundhouse.org.uk
POP-UP: PETER JONES FOR MEN
Sloane Square department store Peter Jones
has a solution for men who are given cold
shivers by the very thought of Christmas
shopping. It has set up a special room with
an edited selection of the best Christmas
gifts, and personal shoppers will be on hand
to give one-on-one guidance to chaps need-
ing a bit of present-buying inspiration.
There’s also a chill out zone for shoppers to
relax in, with leather sofas, table football and
pool, Wii consoles and video games. Peter
Jones, Sloane Square, SW1W 8EL.
www.peterjones.co.uk
Stars in their pies:
mincemeat magic
OUT OF OFFICE
TIMOTHY BARBER
It was a good year for books. Here’s a
guide to the best presents among them
CRISIS ECONOMICS
BY NOURIEL ROUBINI WITH
STEPEHN MIHM
Pengiuin, £25
More than just another me-too
account of the crisis, Nouriel Roubini
– often called Dr Doom for his
Cassandra-like prophecies – gives a
compelling account of the 2008 melt-
down. He provides the lay reader with
succinct and clearly written explana-
tions of the causes and consequences
of the financial crash.
MACROWIKINOMICS: REBOOTING
BUSINESS AND THE WORLD
BY DON TAPSTER AND
ANTHONY WILLIAMS
Atlantic Books, £19.99
The sequel to Wikinomics, which
focused on how the internet is chang-
ing the way businesses think,
Macrowikinomics goes one step fur-
ther than the original. This is an
insightful analysis into how technolo-
gy and the internet are shaping think-
ing and development in areas such as
government, media, education and
healthcare.
THE BIG SHORT: INSIDE THE
DOOMSDAY MACHINE
BY MICHAEL LEWIS
Allen Lane, £25
A riveting and accessible account of
the sub-prime mortgage disaster from
the author of Liar’s Poker. Lewis focus-
es on the characters the heart of the
crisis from those who saw it coming
to those who were merrily packaging
up mortgages. It’s so entertaining you
even start to enjoy and understand
complex derivatives.
A JOURNEY
BY TONY BLAIR
Hutchinson, £25
The former PM’s autobiography is
chatty, fluent and totally absorbing.
Blair gives an insight into his time in
power, from the success of the Good
Friday agreement to the decision to
invade Iraq. He also gives (slightly
too?) vivid a glimpse into his personal
life.
HIGH FINANCIER: THE LIVES AND
TIME OF SIEGMUND WARBURG
BY NIALL FERGUSON
Allen Lane, £30
Niall Ferguson’s subject is the idiosyn-
cratic refugee from Hitler’s Germany
who rose to become one of the domi-
nant post-war figures in the City of
London. Meticulously researched, he
captures the conservative methods of
Warburg’s bank – a far cry from
boom-time Wall Street.
ALCHEMISTS OF LOSS
BY KEVIN DOWD AND MARTIN
HUTCHINSON
John Wiley & Sons, £16.99
Be afraid. This study of the financial
crash concludes that its causes have
not been dealt with and that London
risks becoming “an excellent market
for rottweilers, wire mesh and tat-
tooed thugs”. Blaming both politi-
cians and modern finance, it is a
fascinating, troubling read.
Lifestyle | Books
27 CITYA.M. 2 DECEMBER 2010
BUSINESS AND
ECONOMICS
2010’s Christmas book round-up
SHADOW
BY MICHAEL MORPUGO
Harper Collins, £12.99
For ages nine and up. The author of
War Horse offers us another novel
about war and the loyalty of ani-
mals. Aman, an Afghani boy trying
to flee his war-torn country, finds a
dog outside the caves where he lives.
The dog will not leave his side, and
the fates of boy and dog are linked.
THE ICE BEAR
BY JACKIE MORRIS
Frances Lincoln, £11.99
For ages four to seven. The Ice Bear is
filled with rich illustrations of the
Arctic and its inhabitants. Set when
people and animals coexisted in har-
mony, a bear-child is raised by a
hunter and his wife. When the child
is taken back to the bears, however,
the hunter is determined to kill the
creature that has taken his child.
SHARE!
BY ANTHEA SIMMONS AND GEORGIE
BIRKETT
Andersen, £10.99
For ages zero to five. Share! is an
endearing picture book for the new
reader. It starts when an older sis-
ter tries to share her toys with her
crying baby brother. Wrecked puz-
zles and wet blankets follow, but in
the end she learns that sharing can
be fun.
JEREMIAH JELLYFISH FLIES HIGH
BY JOHN FARDELL
Andersen, £10.99
For ages seven and up. Jeremiah
Jellyfish is bored of his uneventful
underwater existence. He looks for
adventure and meets a stressed-out
businessman. They switch lives and
Jeremiah becomes an executive
heading a rocket plane company. An
absolutely lovely little book.
EINSTEIN’S UNDERPANTS – AND
HOW THEY SAVED THE WORLD BY
BY ANTHONY MCGOWAN
Yearling, £5.99
For ages nine and up. In this quirky
adventure, math geek Alexander
takes on an imminent invasion from
outer space. What’s his secret
CHILDREN
weapon? Lots of help from the old
underpants of a scientific genius,
of course!
BILLIONAIRE BOY
BY DAVID WALLIAMS
Harper Collins, £12.99
For ages nine and up. Joe is fabu-
lously wealthy – he’s billionaire boy,
after all. He’s got his own bowling
alley, his own cinema, even his own
orangutan. But he hasn’t got any
friends. What happens when some-
one comes along who likes Joe for
Joe? Not a bad effort at all by
Walliams, clearly a man of many
talents.
THE FINKLER QUESTION
BY HOWARD JACOBSON
Bloomsbury, £18.99
Britain’s answer to Phillip Roth, this
touching, clever and deeply amusing
look at Jews (and non-Jews) from
Howard Jacobson won this year’s
Man Booker Prize. Certainly one of
the year’s must-reads – and a good
one for the fireside (or beach) too.
FREEDOM
BY JONATHAN FRANZEN
Fourth Estate, £20
It took him nine years to produce,
but Jonathan Frazen’s Freedom was
worth the wait. As in The
Corrections, Franzen’s subject is the
American middle class, and its awk-
wardness, insecurity and hypocrisy.
Expertly written, Freedom exposes
the difficulties of the pursuit of hap-
piness.
SOLAR
BY IAN MCEWAN
Jonathan Cape, £18.99
Daniel Beard, an over-the-hill physi-
cist that once won the Nobel Prize,
tries to regain professional glory
with a new way to create solar ener-
gy – but makes some big mistakes
along the way. He is compelling and
repellent in equal measure, and cer-
tainly one of McEwan’s best narra-
tors to date.
THE THOUSAND AUTUMNS OF
JACOB DE ZOET
BY DAVID MITCHELL
Sceptre, £18.99
The dazzlingly talented David
Mitchell (of Cloud Atlas glory), took
six years to write this novel. Set in
18th-century Japan, it is a meticu-
lous study of East meets West with
razor-sharp imagery. It’s a work of
art as much as of fictional skill.
Fantastic for history and fiction
buffs – and the pretty cover doesn’t
hurt.
THE PASSAGE
BY JUSTIN CRONIN
Orion, £20
Touted as one of the best supernatu-
ral thrillers ever written, this
scrupulously realised plot spans
more than a half century, as the
earth is ravaged by an outbreak of a
virus that turns humans into blood-
suckers. Cronin one the
PEN/Hemingway prize for a previous
novel: so expect a cut above.
FULL DARK, NO STARS
BY STEPHEN KING
Hodder, £18.99
A collection of novellas from the
master of horror, this is King flexing
his muscles with this traditionally
unpopular form. Think murders in
the American mid-west and rats
crawling out of bodies. A gleeful
compilation of the criminal and the
sordid – fans won’t be disappointed
even if it’s not his best work to date.
FICTION
NOMA: TIME AND PLACE IN
NORDIC CUISINE
BY RENE REDZEPI
Phaidon, £35
Rene Redzepi has been credited
with re-inventing Nordic cuisine.
His Copenhagen restaurant, Noma,
was recognized as the best in the
world by the San Pellegrino World's
50 Best Restaurant awards in 2010.
Here’s his recipe book.
DAN DARE – THE BIOGRAPHY
BY DANIEL TATARSKY
£14.99, Orion
A colourful, beautifully researched
biography of the dashing “pilot of the
NON-FICTION
future” who riveted readers of the
Eagle comic between the 50s and the
80s. Rediscovering the world of the
square-jawed English hero – and his
arch enemy, the Mekon – will be a joy
for any chap over 35.
LIFE
BY KEITH RICHARDS
Weidenfeld & Nicolson £20
Fathers, sons and everyone in
between (including hard-rocking
mums) have helped make this a
number one. It’s full of unedited-
feeling cascades of “life” from
Richards’ post-war youth, Rolling
Stones madness and plenty of asides
about his big lost love: Mick Jagger.
REINVENTING FOOD – FERRAN
ADRIÀ: THE MAN WHO CHANGED
THE WAY WE EAT
BY COLMAN ANDREWS
Phaidon, £19.95
This autobiography of the king of
molecular gastronomy is one of the
must-have foodie tomes of the year. If
Rene Redzepi has redefined
Scandinavian food, Adria has rede-
fined food. This would make a good
companion to the cookbook, which
came out two years ago.
COCO CHANEL: THE LEGEND AND
THE LIFE
BY JUSTINE PICARDIE
Harper Collins, £25
It’s been a good couple of years for
Coco Chanel, founder of the epony-
mous fashion house. Two major
films have been made about her –
Coco Before Chanel and Coco Chanel
and Igor Stravinsky – but for those
who prefer a literary experience,
Picardie’s book is a highly
acclaimed, intelligent account. It’s
equally for fashionistas and for
those interested in the rich history
and friendships of the 1920s French
intelligentsia.
DON’T VOTE! IT JUST ENCOURAGES
THE BASTARDS
BY P.J. O’ROURKE
Grove Press, £16.99
PJ O’Rourke attacks the whole grub-
by business of politics in his latest
book. Arguing that it is time to put
America’s big, fat political ass on a
diet, O’Rourke combines satire with
a larger message about the dangers
of ceding personal responsibility to
the state.
T
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MOTORWAY COPS
BBC1, 8PM
Police fear the worst when a car
carrying a family is involved in a
collision on a motorway. Jamie
Theakston narrates.
AT HOME WITH THE GEORGIANS
BBC2, 9PM
Amanda Vickery uses the diaries and
letters of Georgian era to explore how
the British obsession with homes
began 300 years ago.
LAW& ORDER: CRIMINAL INTENT
CHANNEL 5, 10PM
A student’s apparent suicide turns out
to be murder, prompting Goren and
Eames to investigate the complex
social hierarchy among the students.
BBC1
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4.45am-6amSwitched
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7pmHow the Earth Was Made
8pmIce Road Truckers 10pm
Oil Spill: The Exxon Valdez
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1amGrand Central Station
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8pmHow Do They Do It?
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Wheeler Dealers: 10pmSwamp
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12amDeadliest Catch 1am
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World War Two in HD Colour
3.50amRaging Planet 4.40am
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7pmA Baby Story 8pm10
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and Pregnant with Twins 2am
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7pmModern Family 7.30pm
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Owen. 11pmWayne Rooney’s
Street Striker 12amNCIS: Los
Angeles 1amRoad Wars
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TVPICK
6pmBBC News
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7.30pmEastEnders: BBC News
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Tiger 3.55am-6amBBC News
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the Georgians
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Buzzcocks: Tim Westwood
hosts the music quiz.
10.30pmNewsnight: Weather
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You’re Fired!
1amBBC News 3.55am-6amClose
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1 2 3 4 5 6
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7
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6
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31
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13
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37
12
11
24
16
Fill the grid so that each block
adds up to the total in the box
above or to the left of it.
You can only use the digits 1-9
and you must not use the
same digit twice in a block.
The same digit may occur
more than once in a row or
column, but it must be in a
separate block.
COFFEE BREAK
Copyright Puzzle Press Ltd, www.puzzlepress.co.uk
KAKURO
QUICK CROSSWORD
LAST ISSUE’S
SOLUTIONS
KAKURO
WORDWHEEL
Using only the letters in the Wordwheel, you have
ten minutes to find as many words as possible,
none of which may be plurals, foreign words or
proper nouns. Each word must be of three letters
or more, all must contain the central letter and
letters can only be used once in every word. There
is at least one nine-letter word in the wheel.
SUDOKU
Place the numbers from 1 to 9 in each empty cell so that each
row, each column and each 3x3 block contains all the numbers
from 1 to 9 to solve this tricky Sudoku puzzle.
SUDOKU
QUICK CROSSWORD
ACROSS
1 Occasions for buying at
reduced prices (5)
4 Solid projectiles shot
by a musket (5)
7 Rouse (6)
9 Scheme (4)
10 Run competitively (4)
12 Walking-stick (4)
13 Oval fruit with a very
large seed (5)
15 Relax in a chair (3)
17 Remark made
spontaneously (2,3)
19 Front of the human head (4)
21 Group of countries in a
special alliance (4)
23 Oxidisation caused by
moisture in the air (4)
24 Smear with ointment (6)
25 Blue ___, flag indicating a
ship is ready to sail (5)
26 Explode (5)
DOWN
1 In short supply (6)
2 Acquired
knowledge (7)
3 Prophet (4)
5 Trembling poplar (5)
6 Mentally healthy (4)
8 Country, capital
Windhoek (7)
11 Feline mammal (3)
14 Person who cuts
and sets panes
into windows
or doors (7)
15 Half a dozen (3)
16 Seven people
considered as
a unit (6)
18 Espresso cofee
with milk (5)
20 Harvest (4)
22 Stuck-up person (4)
M
E
R
O
I G
C
T
E


4
4
4




C A C H E E A R L Y
O H L L I
M U E S L I A S B O
M S T I N G R A Y
A R T I S T M E A L
N L E B E
D I L L R H E S U S
T A N G I B L E O
C A P E M O L E S T
L S M D H
G Y P S Y B A S S O
9 5 7 9 4 2
6 2 4 5 8 1 9 3 7
1 2 4 6 3 1 3
1 4 6 7 8 7 9
6 9 5 8 2 7 4 8
3 9 3 9
3 4 1 2 4 5 2 1
9 8 2 9 7 4 6
1 7 9 8 6 7 5
2 6 1 4 7 5 9 3 8
9 8 2 1 1 3
5 8 4 3 7 6 1 2 9
1 7 6 9 8 2 5 4 3
9 2 3 1 4 5 8 6 7
4 3 9 8 2 1 7 5 6
6 1 7 4 5 3 9 8 2
8 5 2 6 9 7 3 1 4
7 6 5 2 3 8 4 9 1
2 9 8 7 1 4 6 3 5
3 4 1 5 6 9 2 7 8
WORDWHEEL
The nine-letter word was
TANGERINE
Lifestyle | TV&Games
CITYA.M. 2 DECEMBER 2010 28
Sport
29
Birmingham boss
Alex McLeish (inset)
hopes last night’s
violence will not
have a negative
impact on
England’s 2018
World Cup bid
Picture: PA/
ACTION IMAGES
CRICKET TRADER OLLIE DREW HIGHLIGHTS THE BEST BETS AHEAD OF THE ASHES
SECOND TEST
A
NDREW STRAUSS and
Ricky Ponting have had
barely enough time for
the amazing turn-
around of the drawn first Test
to sink in before the second Test
starts in Adelaide tonight.
The Adelaide Oval has a repu-
tation as a batsman’s pitch but
we should also expect a conclu-
sion. Formerly famous for yield-
ing draws, there have only been
three here since 1991.
Laying the draw on Betdaq
therefore seems a good option,
but it could be better to wait
until after the first day’s play,
assuming plenty of runs have
been scored, to do so.
Kevin Pietersen has looked
down in the dumps for a pro-
longed period, but with an
opening score of 43 last week
he appeared much happier.
He is due a sizeable score and
the Adelaide Oval could be just
the venue to hand it to him.
Pietersen is 9/2 to be top
England scorer but, as we could
see a number of high totals on
the first few days, there’s better
value in Blue Square’s 4/1 for KP
to score a first innings century.
Sporting Index have updated
their series player spread mar-
kets after the Brisbane Test and,
unsurprisingly after his 195,
Mike Hussey’s runs quote has
shot up to 480-500.
I am convinced that ‘Mr
Cricket’s’ first innings knock
was a freak score though, he
somehow managed to survive a
new ball spell from Jimmy
Anderson, and therefore advise
selling at 480.
In his final Ashes warm-up
for Western Australia he was
dismissed for a golden duck
and three, while he also scored
ducks in the 2009 Ashes at
Edgbaston and the Oval.
Pietersen ready for return to form
POINTERS...
Lay draw after first day on Betdaq
Kevin Pietersen to score first innings cen-
tury at 4/1 with Blue Square
Sell Mike Hussey’s series runs at 480 with
Sporting Index
Results
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SPORTS EDITORFRANK DALLERES
email sport@cityam.com
BIRMINGHAM are through to the Carling Cup
semi-final after edging out local rivals Aston
Villa at St Andrews, but victory was marred by
scenes of fan violence which are set to be inves-
tigated by the Football Association.
With Prince William and Prime Minister
David Cameron over in Zurich attempting one
final push to convince Fifa’s ExCo members
that England’s 2018 World Cup bid would offer
a fan-friendly experience, the timing of the
hundreds of fans who confronted riot police at
the final whistle could not have been worse.
The FA were swift in releasing a statement
last night which read: “The FA will fully investi-
gate the matter in conjunction with the appro-
priate authorities. The FA abhors acts of violent
behaviour.”
Birmingham manager Alex McLeish admit-
ted that the disgraceful scenes threatened to
drag English football “back to the dark ages”
but was confident the events of last night
would not impact on the World Cup ballot
which takes place this afternoon.
He said: “I don’t think that will affect the
World Cup bid. Let’s hope England get it
because they deserve it, [but] it doesn’t look
good. It takes us back to the dark ages.”
The game itself was a lively affair with
Birmingham taking the lead through a
Sebastien Larsson penalty, which was can-
celled out on the half hour by Gabriel
Agbonlahor. The match was drifting towards
extra-time, but Nicola Zigic’s scrappy 84th
minute effort booked the Blues a place in their
first league cup semi-final for nine years.
Riots mar Blues cup win
BY JAMES GOLDMAN
FOOTBALL

2
1
BIRMINGHAM
ASTON VILLA
Sport | Cricket 30 CITYA.M. 2 DECEMBER 2010
T
HE first punches have been
thrown and, as England pre-
pare to start the second Ashes
Test tonight, it is Australia who
are reeling from some body blows to
their confidence.
The Aussies are used to starting
with a win and got themselves in a
great position at the Gabba. England
will have been disappointed not to be
batting on the second day and were,
frankly, staring down the barrel.
But the way they came back, led by
Alastair Cook, was sensational. For
Australia it was a massive kick in the
teeth; for England, it was an outcome
that will galvanise the dressing room.
It confirms what they believed:
that they can do this. They now know
that if they find themselves in trou-
ble they are capable of getting 500-1
to dig their way out of it again.
Australia have major worries in
their attack, which proved toothless
in the second innings. They could
make changes but just don’t have
bowlers who will scare England.
Phil Tufnell is part of Paragon Sports
Management. For all your hospitality and
event requirements please contact Paragon
on 020 83328640 or visit www.paragonhos-
pitality.co.uk
England kicked them in the teeth
l CAPTAINCY
Andrew Strauss did a reasonable
job in the first Test. He made the
right calls, but sometimes you
come up against a great
partnership, as he did in Hussey and
Haddin. Perhaps he could have tried
something funkier with his fielding positions
after England’s attack had failed to dislodge
them for a while, but he didn’t do much
wrong. I might have left the Aussies in the
field for another half hour, but he got the
timing of the declaration about right.
THE ALL-ROUNDER |
CONDITIONS, STATS AND BANTER
PITCH
Pity the bowlers. After toiling in
Brisbane, Adelaide looks likely to
live up to its reputation as being a
batsman’s paradise.
STATS OF THE DAY
It’s a tough ask to dig out a bowler
friendly Adelaide related stat, but
we’ve found something that might
give Graeme Swann some cheer.
There have been 13 five-wicket
hauls in the last decade and over
half of them have gone to spinners.
Shane Warne, a freak of nature
admittedly, took 30 wickets in the
last five years here. Moreover,
despite an average first innings
score of 416 over the last 10 Tests,
there have only been two draws.
FIGHTING TALK
“What should a groundsman make
sure he does two days out from a
Test match? Cover the nets when it
rains maybe? Pathetic.” Kevin
Pietersen, we think, isn’t too happy
with the Adelaide ground staff. We
assume nobody under the age of
10 reads these pages, so we’ve
removed the 13 exclamation marks
KP used for extra emphasis.
“He told me you had to bite on a
towel when you put it on because
it was agony.” Stuart Broad says
Ian Botham’s cure for blisters –
surgical spirit if you’re interested –
smarts just a tad.
l PLAYING IN AUSTRALIA
The very fact that England
managed to turn a losing position
into a very creditable draw shows
how well they have adapted to
both conditions and a hostile
environment. After the way the first
day went they did so well to not let it cost
them, because it was looking precarious. The
second Test will be completey different.
Adelaide might spin and won’t be as flat and
hard a wicket as Brisbane, so an extra
bowler is an option.
l BIG-GAME PERFORMANCE
The only things England could
improve on in the second Test are
being more ruthless when we
start to make a dent in their order,
and batting better in their own first
innings. As it was, they stepped up to
the plate in the most impressive manner pos-
sible, refusing to let their heads drop or
become dispirited. Now all the England play-
ers have got into the Ashes their perform-
ances are likely to be even more
accomplished.
l BATTING
England made a nervous
start in Brisbane, did not
bat well, with Andrew
Strauss going third ball, and
were all out far quicker than they’d have
expected in the first innings. But they
learned from their mistakes and responded
in superb fashion in the second innings.
Strauss recovered brilliantly and was
decisive and committed and Trott was
magnificent, but the man who stood out
was Alastair Cook (right). He’d had lots of
criticism and the Aussies had targeted him
as a weak link, but he slammed the door on
them. He had to be defiant and resilient
and he did it in spades: his 235 not out was
just what was needed.
l BOWLING
England
should be
cheered
they got
themselves
in a good
position in the first
innings, with Australia
at around 150-5
before Mike Hussey
and Brad Haddin’s
heroic stand.
Steven Finn
showed his
promise with six
wickets, while the
other guys started
to get going. The
only slight negative
was Graeme Swann,
who was quieter than
we expected, but he’ll
come on in Adelaide.
England could play
another bowler – Tim
Bresnan or another
spinner in Monty
Panesar for Paul
Collingwood – but I
think they’ll stick with
a successful formula.
8/10 9/10 9/10
8/10
WEATHER FORECAST
Sunny intervals
HIGH
LOW
25
0
17
0
Spin hero Phil Tufnell assesses all facets of the Ashes effort ahead of the second Test
E
N
G
L
A
N
D
10/10
ENGLAND’S hopes of winning today’s
vote to host the 2018 World Cup
surged last night after frantic
schmoozing and some late hiccups
from rival bidders appeared to turn
the tide in their favour.
A stellar cast of ambassadors
including former England captain
David Beckham, Prince William and
Prime Minister David Cameron led an
impressive charm offensive ahead of
today’s secret ballot of Fifa’s executive
committee (ExCo).
And while England parachuted in
its big hitters, key rivals Russia and
Spain/Portugal suffered from the
damaging withdrawals of high-pro-
file frontmen Vladimir Putin and
Cristiano Ronaldo.
Bookies slashed England’s odds
amid comparisons with London’s dra-
matic victory in the battle to host the
2012 Olympics, when Beckham and
Lord Coe engineered a late swing in
opinion in Singapore in 2005.
Beckham said: “It adds a hell of a
weight to our bid to have the Prime
Minister and the future King of
England on our side lobbying. I saw
that in Singapore, how having Tony
Blair there supporting the bid was a
huge thing. It’s the same here.”
The midfielder was at his diplomat-
ic best, playing down the furore
caused by Panorama’s allegations of
corruption among ExCo members
earlier this week, insisting: “We can
trust every one of them.”
Beckham met several ExCo mem-
bers in an attempt to win over float-
ing voters, as did Prince William, who
rose at 7am for breakfast with
Paraguayan ExCo member Nicolas
Leoz – one of those accused by the
BBC programme.
Cameron was similarly busy woo-
ing the 22 men who will take part in
this afternoon’s vote and flew back to
Switzerland last night to continue his
efforts, having returned home for
Prime Minister’s Questions.
The day did, however, end on a sour
note with crowd violence at the
Carling Cup quarter-final between
Birmingham and Aston Villa poten-
tially underminding England’s claim
to be offering a “fan-friendly” experi-
ence.
Russian premier Vladimir Putin
pulled out of a planned trip to the
gathering in Zurich, where he had
been expected to present his coun-
try’s case in today’s final pitches.
If that was not enough, Putin
risked further damage to Russia’s oth-
erwise fancied proposal by releasing a
bizarre statement in which he cried
foul play, saying ExCo members had
been “smeared”.
Former England captain Beckham was part of London’s successful bid for the 2012 Olympics, which also swung late on Picture: GETTY
Trott: We’re not haunted by
past Adelaide experiences
ENGLAND batsman Jonathan Trott is
adamant Andrew Strauss’s side are
made of stronger stuff than the one
that crumbled to an Ashes series defin-
ing defeat in Adelaide four years ago.
From a position of total comfort on
the final afternoon, England col-
lapsed to 129 all out inside a single
session, Australia picked off the 168
runs required in just 32 overs to claim
a miraculous win and take an all but
unassailable 2-0 lead in the series.
Four of England’s top five from
that horror show – Trott is the only
newcomer – will return to the scene
of the crime when play gets under-
way in the second Test today, but the
Warwickshire batsman, who now has
two centuries from two Tests against
Australia following his heroics in
Brisbane, says the fightback in the
first Test highlights this England
side’s never-say-die mentality.
He said: “I don’t think anyone is
worried about what happened four
years ago. We come to Adelaide with
real determination and energy to
hopefully go 1-0 up in the series.
“That’s what we’ll be thinking
about – we won’t be worrying about
what’s happened in the past or what
happened in the last innings. That’s
finished as far as we’re concerned.
“We showed great character the
way we were able to get back into the
game. There’s a good feeling in the
dressing room at the moment – it’s a
nice feeling having a settled XI and
have a group who are working hard.”
While England are certain to name
and unchanged side, Australia are set
to axe Mitchell Johnson after he fin-
ished the first Test wicketless and
bring in either Ryan Harris or left-
armer Doug Bollinger.
ARSENAL’S position as overwhelming
Carling Cup favourites was enhanced
last night when they were paired with
Championship side Ipswich in the
draw for the semi-finals.
The Gunners, without a trophy
since their FA Cup victory over
Manchester United in 2005, are now
ideally placed to win their first silver-
ware since they moved into Emirates
Stadium.
Ipswich, through to the last four for
the first time since 2001, are currently
just four points outside of the
Championship relegation zone but
secured their place in the last four by
beating Premier League West Brom 1-
0 at Portman Road last night.
West Ham’s reward for their 4-0 win
over Manchester United is a tie against
Birmingham. Alex McLeish’s side beat
Aston Villa 2-1 in the Second City
derby to qualify for the semi-finals.
VIOLENCE MARS BLUES JOY: PAGE 29
FOOTBALL

Arsenal land plum draw
and Irons get the Blues
Star trio turn
England 2018
bid around as
D-Day arrives
Sport
32 CITYA.M. 2 DECEMBER 2010
“WE’VE GOT THOSE
AUSSIES REELING”
TUFFERS GIVES HIS
ASHES VERDICT: P30
BY FRANK DALLERES
FOOTBALL

BY JAMES GOLDMAN
CRICKET

Ipswich Town v Arsenal
West Ham v Birmingham City
First legs to be played: w/c 10 Jan
Second legs to be played: w/c 24 Jan
● The four bidders will make their
final 30-minute presentations to the
executive committee, starting at 8am
GMT.
● As pre-determined by a draw,
Holland/Belgium will make the first
pitch, with England in the penultimate
slot at 10am. Spain/Portugal go at 9am
and Russia have the much coveted
concluding appointment.
●The all-important secret ballot of the
22 ExCo members then finally takes
place at Fifa’s headquarters on banks of
Lake Geneva, with a majority needed
for victory.
●If no bidders have a majority – ie 12
votes – then the candidate with the
fewest votes is eliminated and another
round of voting held until a majority is
achieved. In the event of a tie Fifa pres-
ident Sepp Blatter has the casting vote.
●The result – and that for the 2022
World Cup, which will also be voted on
today – is expected to be announced
sometime after 3pm, by Blatter at the
Zurich exhibition centre.
LOWDOWN | HOW THE VOTE DRAMA WILL UNFOLD TODAY
SEMI-FINALS | CARLING CUP